<PAGE>
As filed with the Securities and Exchange Commission on May 1, 1996
Securities Act File No. 2-96141
Investment Company Act File No. 811-4244
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 16
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 13
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SOUND SHORE FUND, INC.
(Exact Name of Registrant as Specified in its Charter)
Two Portland Square, Portland, Maine 04101
(Address of Principal Executive Office)
Registrant's Telephone Number, including Area Code: 203-629-1980
__________________________________________________
Max Berueffy
c/o Forum Financial Services, Inc.
Two Portland Square, Portland, Maine 04101
(Name and Address of Agent for Service)
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It is proposed that this filing will become effective:
X immediately upon filing pursuant to Rule 485, paragraph (b)
___
___ on [ ] pursuant to Rule 485, paragraph (b)
___ 60 days after filing pursuant to Rule 485, paragraph (a)(i)
___ on [ ] pursuant to Rule 485, paragraph (a)(i)
___ 75 days after filing pursuant to Rule 485, paragraph (a)(ii)
___ on [ ] pursuant to Rule 485, paragraph (a)(ii)
___ this post-effective amendment designates a new effective date for a
previously filed post-effective amendment
The Registrant has registered an indefinite number of shares of common stock
under the Securities Act of 1933 pursuant to Section 24(f) of the Investment
Company Act of 1940. Accordingly, no fee is payable herewith. Registrant filed
a Rule 24f-2 notice for its most recent fiscal year on February 28, 1996.
<PAGE>
CROSS REFERENCE SHEET
(AS REQUIRED BY RULE 404(c))
PART A
Form N-1A Location in Prospectus
Item No. (Caption)
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Item 1. Cover Page Cover Page
Item 2. Synopsis Prospectus Summary;
Expenses of Investing in the
Fund
Item 3. Financial Highlights Financial Highlights; General
Information -- Performance
Item 4. General Description of Investment Objective
Registrant and Policies; Investment
Restrictions; General Information
Item 5. Management of the Fund Investment Adviser;
Administrator; Purchase of
Shares
Item 5A. Managements Discussion of Not Applicable
Fund Performance
Item 6. Capital Stock and Other General Information;
Securities Dividends and Distributions;
Taxes
Item 7. Purchase of Securities Purchase of Shares; Retirement
Being Offered Plans; Exchange Privileges
Item 8. Redemption or Repurchase Redemption of Shares
Item 9. Pending Legal Proceedings Not Applicable
<PAGE>
PART B
Location in Statement of
Form N-1A Additional Information
Item No. (Caption)
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Item 10. Cover Page Cover Page
Item 11. Table of Contents Cover Page
Item 12. General Information and History Not Applicable
Item 13. Investment Objectives and Investment Policies;
Policies Special Investment Methods;
Investment Restrictions
Item 14. Management of the Fund Management
Item 15. Control Persons and Principal Management;
Holders of Securities Description of Common Stock
Item 16. Investment Advisory and Other Management
Services
Item 17. Brokerage Allocation Portfolio Transactions
and Brokerage
Item 18. Capital Stock and Other Net Asset Value
Securities
Item 19. Purchase, Redemption and Pricing Redemption of Shares;
of Securities Being Offered Net Asset Value
Item 20. Tax Status Not Applicable
Item 21. Underwriters Management -- Administrator and
Distributor
Item 22. Calculation of Performance Data Performance
Item 23. Financial Statements Financial Statements
<PAGE>
SOUND SHORE FUND
Sound Shore Fund, Inc. Two Portland Square, Portland, Maine 04101
PROSPECTUS
MAY 1, 1996
Sound Shore Fund, Inc. (the "Fund") is a no-load, open-end, diversified,
management investment company. The Fund's investment objective is to seek
growth of capital, and investments will be made based upon their potential for
capital growth. Current income, while considered important, will be secondary
to the objective of capital growth.
Sound Shore Management, Inc. serves as Investment Adviser to the Fund.
Forum Financial Services, Inc. serves as Administrator and Distributor of
the Fund.
This Prospectus sets forth concisely the information a prospective investor
should know before investing in the Fund. A Statement of Additional
Information dated May 1, 1996, containing additional and more detailed
information about the Fund (the "Statement of Additional Information"), has
been filed with the Securities and Exchange Commission (the "SEC") and is
hereby incorporated by reference into this Prospectus. It is available
without charge and can be obtained by writing the Fund at the address set
forth above or by calling the Fund's Investment Adviser at (800) 551-1980.
Investors desiring more information about the Fund may call the Fund's
Investment Adviser at the same number.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION; NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
PROSPECTUS SUMMARY
THE FUND. Sound Shore Fund is a diversified mutual fund whose shares are
offered without a sales charge.
INVESTMENT OBJECTIVE. The investment objective of the Fund is to seek growth
of capital, and investments will be made based upon their potential for
capital growth. In seeking to meet this objective the Fund intends to
purchase securities which management believes display good growth potential
and are selling at a discount to perceived value in the marketplace. Current
income, while considered important, will be secondary to the objective of
capital growth. The Fund may invest in common stocks, preferred stocks and
fixed income securities. See "Investment Objective and Policies."
NO SALES CHARGES. There are no sales charges, redemption fees or Rule 12b-1
fees. Shares may be purchased and redeemed at net asset value.
INVESTMENT ADVISER. The investment adviser to the Fund is Sound Shore
Management, Inc. (the "Adviser"), which also serves as investment adviser
to individuals and institutional clients. The investment advisory fee is at
the annual rate of 0.75% of the average daily net assets of the Fund. See
"Investment Adviser."
ADMINISTRATOR. The administrator of the Fund and distributor of its shares
is Forum Financial Services, Inc., which serves as administrator and
distributor to other mutual funds. For serving as administrator of the Fund,
Forum Financial Services, Inc. receives a fee at the annual rate of 0.10% of
the average daily net assets of the Fund. See "Administrator."
PURCHASE OF SHARES. Shares may be purchased directly through the Fund's
transfer agent, Forum Financial Corp., or through certain broker-dealers.
There is a $10,000 minimum initial investment on shares purchased directly,
and a $5,000 minimum initial investment on shares purchased through
broker-dealers. See "Purchase of Shares."
SHARE VALUE. The value of Fund shares will fluctuate with changes in the
market value of the Fund's portfolio securities and is consequently subject
to the usual market risks of investment.
SYSTEMATIC WITHDRAWAL PLAN. The Systematic Withdrawal Plan permits a
shareholder owning Fund shares with a value of $20,000 or more to redeem on a
regular basis a portion of the shares having a specified value and receive
checks for the proceeds. See "Redemption of Shares - Systematic Withdrawal
Plan."
IRA AND RETIREMENT PLANS. IRA and other retirement plans utilizing the Fund
as an investment vehicle provide Federal income tax benefits for qualified
participants. See "Retirement Plans."
EXCHANGE PRIVILEGES. Exchange privileges are offered whereby shareholders of
the Fund are entitled to exchange some or all of their shares in the Fund for
shares of certain money market and bond mutual funds. See "Exchange
Privileges."
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<PAGE>
DIVIDENDS AND DISTRIBUTIONS. Dividends of net investment income will
normally be paid semi-annually. Capital gain distributions, if any, will be
paid at approximately the end of the Funds fiscal year. Income dividends and
capital gain distributions are automatically reinvested in additional shares
of the Fund unless the shareholder instructs otherwise. See "Dividends and
Distributions."
EXPENSES OF INVESTING IN THE FUND
The purpose of the following table is to assist an investor in understanding
the various costs and expenses that an investor in the Fund will bear
directly or indirectly.
ANNUAL FUND OPERATING EXPENSES (as a percentage of average net assets)
Management Fees................................. 0.75%
Other Expenses.................................. 0.40%
Total Fund Operating Expenses................... 1.15%
EXAMPLE
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
<S> <C> <C> <C> <C>
You would pay the following expenses on a
$1,000 investment assuming a 5% annual return
and redemption at the end of each period: $12 $37 $63 $140
</TABLE>
The amounts of expenses and fees are those incurred during the Fund's most
recent fiscal year. For a further description of these fees, see "Investment
Adviser" and "Administrator." The example is based on the expenses listed in
the table and assumes the reinvestment of all dividends. THE FIGURES
REFLECTED IN THE EXAMPLE SHOULD NOT BE CONSIDERED AS A REPRESENTATION OF PAST
OR FUTURE EXPENSES OR RETURN. ACTUAL EXPENSES AND RETURN MAY BE GREATER OR
LESS THAN INDICATED.
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<PAGE>
FINANCIAL HIGHLIGHTS
The following information represents selected data for a single share
outstanding of the Fund. The information for the past five years has been
audited by Deloitte & Touche LLP, Independent Certified Public Accountants.
The Funds financial statements for the fiscal year ended December 31, 1995
and independent auditors report thereon are contained in the Annual Report of
the Funds and are incorporated by reference into the Statement of Additional
Information. Further information about the performance of the Fund is
contained in the Annual Report, which may be obtained from the Fund without
charge.
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C>
Beginning net asset value
per share 15.46 $16.50 $16.24 $15.17 $11.77 $13.73
Net investment income 0.25 0.22 0.14 0.17 0.30 0.51
Net realized and unrealized
investment gain (loss)
on securities 4.33 (0.17) 1.80 3.02 3.48 (1.95)
Dividends paid from net
investment income (0.21) (0.22) (0.14) (0.175) (0.285) (0.52)
Distributions from net
realized gains (1.67) (0.87) (1.54) (1.95) (0.095) --
Ending net asset value
per share $18.16 $15.46 $16.50 $16.24 $15.17 $11.77
Ratios to average net assets:
Expenses 1.15% 1.22% 1.27% 1.37% 1.30% 1.33%
Net investment income 1.41% 1.32% .88% 1.10% 2.10% 3.55%
Total return 29.87% 0.30% 11.96% 21.17% 32.24% (10.64%)
Portfolio turnover rate 53.01% 75.52% 90.99% 88.33% 100.01% 105.20%
Net assets at end of year
(000's omitted) $67,602 $59,993 $58,179 $39,974 $32,211 $28,470
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Nine Months Year May 3, 1985
Ended Ended (inception) to
December 31, March 31, March 31,
1989 1988 1987 1987 1986
<S> <C> <C> <C> <C> <C>
Beginning net asset value
per share $12.67 $11.58 $15.97 $13.67 $10.00
Net investment income 0.33 0.21 0.11 0.14 0.15
Net realized and unrealized
investment gain (loss)
on securities 2.50 2.24 (3.11) 2.63 3.66
Dividends paid from net
investment income (0.35) (0.18) (0.18) (0.08) (0.14)
Distributions from net
realized gains (1.42) (1.18) (1.21) (0.39) --
Ending net asset value
per share $13.73 $12.67 $11.58 $15.97 $13.67
Ratios to average net assets:
Expenses 1.24% 1.40% 1.36%(a) 1.45% 1.48%(a)(b)
Net investment income 2.37% 1.57% 1.06%(a) 1.14% 2.55%(a)(b)
Total return 22.42% 21.14% (19.87%)(a) 21.01% 38.10%(a)
Portfolio turnover rate 90.83% 134.30% 85.05% 91.21% 81.74%
Net assets at end of year
(000's omitted) $42,470 $28,512 $23,798 $31,487 $13,857
</TABLE>
(a) Annualized
(b) Net of advisory and administration fees waived equivalent to 0.72% of
average net assets.
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<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
The investment objective of the Fund is to seek growth of capital and
investments will be made based upon their potential for capital growth.
Current income, while considered important, will be secondary to the
objective of capital growth. There is no assurance that the Fund will
achieve its investment objective.
The Fund expects that for most periods a substantial portion, if not all, of
its assets will be invested in a diversified portfolio of common stocks
judged by the Adviser to have favorable value to price characteristics. The
Fund may also invest in U.S. Government or Government agency obligations,
investment grade corporate bonds, preferred stocks, convertible securities,
and/or short-term money market instruments when the Adviser believes that
investment in these securities, in light of current market conditions, is
consistent with the Fund's investment objectives. When business or financial
conditions warrant, the Fund may take a defensive position and invest
temporarily without limit in investment grade debt securities, preferred
stocks or in money market instruments. Money market instruments for this
purpose include obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities (including such obligations subject to
repurchase agreements), commercial paper rated Prime-1 by Moody's Investors
Service or A-1 by Standard & Poor's, and certificates of deposit and bankers'
acceptances issued by domestic banks having total assets in excess of one
billion dollars. A repurchase agreement is an instrument under which an
investor (e.g., the Fund) purchases a U.S. Government security from a vendor,
with an agreement by the vendor to repurchase the security at the same price,
plus interest at a specified rate. Repurchase agreements usually have a
short duration, often less than one week. The Fund may invest in warrants
which entitle the holder to buy equity securities at a specific price for a
specific period of time. The Fund will not, however, purchase any warrant
if, as a result of such purchase, more than 5% of the Fund's total assets
would be invested in warrants.
The Fund will make equity investments in, among others, securities listed on
a securities exchange or included in the National Association of Securities
Dealers Automated Quotation (NASDAQ) National Market System or National List.
As a matter of policy, not all aspects of the national economy will be
represented in the Fund's portfolio and the portfolio will not have the same
diversification as the broad market averages such as the Dow Jones Industrial
Average and the Standard & Poor's 500. Therefore, its results should differ
from these market averages. The Fund may invest up to 10% of its total
assets in the securities of other investment companies, in which case the
Fund would in effect pay duplicate fees for such services as investment
advice, administration and distribution.
The Adviser seeks investments in equity securities based on its judgment of
fundamental value. Factors deemed particularly relevant include price,
earnings expectations, earnings and price histories, balance sheet
characteristics and perceived management skills. Changes in the economic and
political outlooks as well as individual corporate developments influence
specific security prices. When the Fund's investments lose their perceived
value relative to other similar investments and investment alternatives, they
are sold. It is the Adviser's expectation, based on its experience, that
most of the holdings will be long-term in nature (greater than a six-month
-6-
<PAGE>
holding period) and that the annual turnover of the Fund should not exceed
100%. A portfolio turnover rate of 100% would occur, for example, if all the
stocks in the portfolio were replaced in a one year period.
The Fund's investment objective is fundamental and may not be changed without
shareholder approval. The Fund's investment policies may be changed by the
Fund's Board of Directors (the "Board").
INVESTMENT RESTRICTIONS
The Fund has adopted certain investment restrictions which may not be changed
without the approval of the Fund's shareholders. Briefly, these restrictions
provide that the Fund may not:
1. Purchase the securities of any one issuer, other than the U.S.
Government or any of its agencies or instrumentalities, if immediately after
such purchase more than 5% of the value of its total assets would be invested
in such issuer or the Fund would own more than 10% of the outstanding voting
securities of such issuer, except that up to 25% of the value of the Fund's
total assets may be invested without regard to such 5% and 10% limitations;
2. Invest more than 25% of the value of its total assets in any particular
industry;
3. Purchase securities on margin, but it may obtain such short-term credits
from banks as may be necessary for the clearance of purchases and sales of
securities;
4. Make loans of its assets to any person, except for the purchase of debt
securities as discussed under "Investment Objective and Policies;"
5. Borrow money except for (i) the short-term credits from banks referred
to in paragraph 3 above and (ii) borrowings from banks for temporary or
emergency purposes, including the meeting of redemption requests which might
require the untimely disposition of securities. Borrowing in the aggregate
may not exceed 15%, and borrowing for purposes other than meeting redemptions
may not exceed 5% of the value of the Fund's total assets (including the
amount borrowed) less liabilities (not including the amount borrowed) at the
time the borrowing is made. Outstanding borrowings in excess of 5% of the
value of the Fund's total assets will be repaid before any subsequent
investments are made;
6. Mortgage, pledge or hypothecate any of its assets, except as may be
necessary in connection with permissible borrowings mentioned in paragraph 5
above;
7. Purchase the securities of any other investment company, except that the
Fund may invest up to 10% of its total assets in such securities through
purchases in the open market where to the best information of the Fund no
commission or profit to a sponsor or dealer (other than the customary
broker's commission) results from such purchase, or except when such purchase
is part of a merger, consolidation or acquisition of assets; or
-7-
<PAGE>
8. Act as an underwriter of securities of other issuers, except that the
Fund may acquire restricted or not readily marketable securities under
circumstances where, if such securities were sold, the Fund might be deemed
to be an underwriter for purposes of the Securities Act of 1933. The Fund
will not, however, invest more than 10% of the value of its total assets in
the aggregate in restricted or not readily marketable securities or in
repurchase agreements maturing or terminable in more than seven days.
If a percentage restriction or a rating on investment is adhered to at the
time an investment is made, a later change in percentage resulting from
changes in the value of the Fund's portfolio securities or a later change in
the rating of a portfolio security will not be considered a violation of the
Fund's policies or restrictions.
INVESTMENT ADVISER
The investment adviser to the Fund is Sound Shore Management, Inc., a
Delaware corporation with its principal office at 8 Sound Shore Drive,
Greenwich, Connecticut 06836. The Adviser was, at May 1, 1996, investment
adviser for assets aggregating in excess of $1 billion. In addition to the
Fund, the Adviser's advisory clients include individuals, pension trusts,
profit-sharing trusts and endowments. Most of the accounts which are managed
or advised by the Adviser for these clients have investment objectives which
may vary only slightly from those of each other and those of the Fund. The
Adviser expects to invest assets of such accounts in investments
substantially similar to those which constitute the principal investments of
the Fund. Such accounts are supervised by officers and employees of the
Adviser who may also be acting in similar capacities for the Fund. It is the
policy of the Adviser to allocate advisory recommendations and the placing of
orders in a manner which is deemed equitable by the Adviser to the accounts
involved, including the Fund.
Pursuant to an Investment Advisory Agreement, the Adviser furnishes a
continuous investment program for the Fund's portfolio, makes the day-to-day
investment decisions for the Fund, executes the purchase and sale orders for
the portfolio transactions of the Fund and generally manages the Fund's
investments in accordance with the stated policies of the Fund, subject to
the general supervision of the Board. Consistent with the Rules of Fair
Practice of the National Association of Securities Dealers, Inc. and subject
to seeking best execution, the Adviser may consider sales of shares of the
Fund as a factor in the selection of brokers to execute portfolio
transactions for the Fund. The Adviser provides persons satisfactory to the
Board to serve as officers of the Fund. Such officers, as well as certain
other employees and directors of the Fund, may be directors, officers, or
employees of the Adviser. Messrs. Harry Burn III and T. Gibbs Kane, Jr. may
be deemed "controlling persons" of the Adviser on the basis of their
ownership of the Adviser's stock.
While the Adviser's full staff contributes to the investment services
provided to the Fund, Mr. Kane, President of the Fund and of the Adviser, and
Mr. Burn, Chairman of the Fund and of the Adviser, are primarily responsible
for the day to day management of the Fund. They have served as portfolio
managers for the Fund since its inception.
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<PAGE>
For the fiscal year ended December 31, 1995, the Adviser, for its services
under the Investment Advisory Agreement, received an amount equal to 0.75% of
the Fund's average daily net assets.
ADMINISTRATOR
The Administrator for the Fund is Forum Financial Services, Inc., a Delaware
corporation with principal offices at Two Portland Square, Portland, Maine
04101 (the "Administrator"). As of May 1, 1996, Forum Financial Services,
Inc. provided management, administrative and distribution services to
registered investment companies and collective investment funds with assets
of approximately $15.5 billion. The Administrator is a registered
broker-dealer and investment adviser and is a member of the National
Association of Securities Dealers, Inc.
The Administrator administers all aspects of the Fund's operations subject to
the supervision of the Board except as set forth under "Investment
Adviser." Because of the services rendered the Fund by the Administrator and
the Fund's Adviser, the Fund itself requires no employees other than its
officers, none of whom receives compensation from the Fund and all of whom
are employed by the Adviser, the Administrator or their affiliates. In
connection with its responsibilities as Administrator and in consideration of
its administrative fee, the Administrator is responsible for the supervision
of the overall administration of the Fund (including the Funds receipt of
services for which it must pay), providing the Fund with general office
facilities and providing persons satisfactory to the Board of Directors to
serve as officers of the Fund.
For the fiscal year ended December 31, 1995, the Administrator received a fee
of 0.25% of the average daily net assets of the Fund for administration and
portfolio accounting services under the then-existing Administration Agreement.
Under the new Administration Agreement, effective January 1, 1996, the
Administrator receives a fee of 0.10% of the average daily net assets of the
Fund. Under new Fund Accounting and Transfer Agency Agreements, also dated
January 1, 1996, Forum affiliates, Forum Accounting Services LLC and Forum
Financial Corp., provide portfolio accounting and transfer agency services
for the Fund for a total of 0.15% of the Fund's average daily net assets.
Pursuant to a separate Distribution Services Agreement, the Administrator
acts as distributor of the Fund's shares. The Administrator is not paid any
fee for its distribution services.
SHAREHOLDER SERVICING AND PORTFOLIO ACCOUNTING
Forum Financial Corp. (the "Transfer Agent"), Two Portland Square, Portland,
Maine 04101, a registered transfer agent, acts as the Fund's transfer agent
and dividend disbursing agent. The Transfer Agent maintains an account for
each shareholder of the Funds (unless such accounts are maintained by
sub-transfer agents or processing agents) and performs other transfer agency
and related functions.
The Transfer Agent is authorized to subcontract any or all of its functions
to one or more qualified sub-transfer agents or processing agents, which may
be its affiliates or affiliates of the Adviser, who agree to comply with the
terms of the Transfer Agent's agreement with the Fund.
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<PAGE>
The Transfer Agent may pay those agents for their services, but no such
payment will increase the Transfer Agent's compensation from the Fund.
Under a new Fund Accounting Agreement dated January 1, 1996, Forum Accounting
Services LLC, an affiliate of Forum, performs portfolio accounting services
for the Fund.
PURCHASE OF SHARES
Shares of the Fund are offered at the next determined net asset value without
any sales charge by the Fund as an investment vehicle for individuals,
institutions, fiduciaries and retirement plans. Prospectuses, sales material
and subscription order forms can be obtained from the Fund at the address, or
from the Adviser at the telephone number, listed on the cover of this
Prospectus.
For each shareholder of record, the Transfer Agent, as the shareholder's
agent, establishes an open account to which all shares purchased are
credited, together with any dividends and capital gain distributions which
are paid in additional shares. See "Dividends and Distributions."
Although most shareholders elect not to receive stock certificates,
certificates for full shares can be obtained on specific written request to
the Transfer Agent. No certificates are issued for fractional shares.
MINIMUM INVESTMENT. There is a $10,000 minimum for an initial investment
made directly and a $5,000 minimum initial investment on purchases made
through certain broker-dealers. The minimum initial investment for
individual retirement accounts is $250. There is no minimum for subsequent
investments. All purchase payments will be invested in full and fractional
shares and the Fund has reserved the right to reject any purchase order.
PURCHASE PROCEDURES. To purchase shares of the Fund an investor should send
a check made payable to "Sound Shore Fund, Inc." and a completed subscription
order form to the Transfer Agent at:
Forum Financial Corp.
ATTN: Transfer Agent
P.O. Box 446
Portland, Maine 04112
Checks are accepted subject to collection at full face value in United States
currency.
To purchase shares of the Fund using the wire system for transmittal of money
among banks, an investor should first telephone Sound Shore Management, Inc.
at (800) 551-1980, to obtain an account number. The investor should then
instruct a member commercial bank to wire funds to:
The First National Bank of Boston
Boston, Massachusetts
ABA # 011000390
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<PAGE>
For Credit To: Forum Financial Corp.
Account #: 541-54171
Ref: Sound Shore Fund, Inc.
Account of (YOUR NAME)
Fund Account #: (YOUR ACCOUNT NUMBER)
SS # or Tax ID #: (YOUR SS # OR TAX ID #)
The investor should then promptly complete and mail the subscription order
form. Subsequent purchases can be made by bank wire, as indicated above, or
by mailing a check to the Transfer Agent at the address listed above. Each
investment in shares of the Fund, including dividends and capital gain
distributions reinvested, is acknowledged by a statement showing the number
of shares purchased, the net asset value at which the shares were purchased,
and the new balance of Fund shares owned.
PURCHASING THROUGH YOUR BROKER-DEALER. Shareholder accounts may be
maintained through certain broker-dealers. These broker-dealers may make
arrangements for their customers to purchase and redeem Fund shares by
telephone and some broker-dealers may impose a charge for their services.
Alternatively, an investor who has not made his initial purchase through a
broker-dealer may purchase and redeem those shares directly through the
Transfer Agent without any such charges.
REDEMPTION OF SHARES
Upon receipt by the Transfer Agent of a redemption request in proper form,
shares of the Fund will be redeemed at their next determined net asset value.
REDEMPTION PROCEDURES. Redemptions may be made by letter to the Transfer
Agent at:
Forum Financial Corp.
ATTN: Transfer Agent
P.O. Box 446
Portland, Maine 04112
The letter must specify the name of the Fund, the dollar amount or number of
shares to be redeemed, and the account number. The letter must be signed in
exactly the same way the account is registered (if there is more than one
owner of the shares, all must sign).
If shares to be redeemed are held in certificate form, the certificates must
be enclosed with the letter. Certificates must be properly endorsed and, for
protection, shareholders should use registered mail.
Further documentation, such as copies of corporate resolutions and
instruments of authority, may be requested from corporations, administrators,
executors, personal representatives, trustees or custodians to evidence the
authority of the person or entity making the redemption request.
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<PAGE>
Redemptions may be made through the broker-dealer through whom you purchased
your shares.
SIGNATURE GUARANTEES. A signature guarantee is required for any written
redemption request and for any endorsement on a stock certificate. In
addition, a signature guarantee is required for instructions to change a
shareholder's record name or address, Systematic Withdrawal information,
dividend election or telephone exchange option. Signature guarantees may be
provided by a bank, a broker-dealer, a national securities exchange, a credit
union, or a savings association that is authorized to guarantee signatures,
acceptable to the Fund's transfer agent. Whenever a signature guarantee is
required, each person required to sign for the account must have his
signature guaranteed. Signature guarantees by notaries public are not
acceptable.
SYSTEMATIC WITHDRAWAL PLAN. Any shareholder who owns shares of the Fund with
an aggregate value of $20,000 or more may establish a Systematic Withdrawal
Plan under which the shareholder offers to sell to the Fund at net asset
value the number of full and fractional shares which will produce the
monthly, or quarterly, payments specified (minimum $100.00 per payment).
Depending on the amounts withdrawn, systematic withdrawals may deplete the
investor's principal. Investors contemplating participation in this Plan
should consult their tax advisers.
Shareholders wishing to utilize this Plan may do so by completing an
application which may be obtained by writing or calling the Transfer Agent at
(800) 754-8758. No additional charge to the shareholder is made for this
service.
OTHER REDEMPTION INFORMATION. The proceeds of a redemption may be more or
less than the amount invested and, therefore, a redemption may result in a
gain or loss for Federal income tax purposes. Checks for redemption proceeds
normally will be mailed within seven days, but will not be mailed until all
checks (including a certified or cashier's check) in payment for the purchase
of the shares to be redeemed have been cleared, currently considered by the
Fund to occur 15 days after investment. Unless other instructions are given,
a check for the proceeds of a redemption will be sent to the shareholder's
address of record.
The Fund may suspend the right of redemption during any period when (i)
trading on the New York Stock Exchange is restricted or the Exchange is
closed, other than customary weekend and holiday closings, (ii) the SEC has
by order permitted such suspension or (iii) an emergency, as defined by rules
of the SEC, exists making disposal of portfolio investments or determination
of the value of the net assets of the Fund not reasonably practicable.
To be in a position to eliminate excessive expenses, the Fund reserves the
right to redeem upon not less than 30 days' notice all shares of the Fund in
an account (other than an IRA) which has a value below $1,000. However, a
shareholder will be allowed to make additional investments prior to the date
fixed for redemption to avoid liquidation of the account.
Proceeds of redemptions normally are paid by check. However, payments may
be made wholly or partially in portfolio securities if the Board determines
that payment in cash would be detrimental to the best interests of the Fund.
The Company has filed a formal election with the
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<PAGE>
SEC pursuant to which the Fund will only effect a redemption in portfolio
securities if the particular shareholder is redeeming more than $250,000 or
1% of the Fund's total net assets, whichever is less, during any 90-day
period.
RETIREMENT PLANS
The Fund has a master IRA plan described briefly below. Detailed information
concerning the IRA plan including related documentation on applications and
charges of the custodian may be obtained from the Fund. Contributions to
these plans are deductible for Federal income tax purposes for certain
investors and become taxable only upon withdrawal. In addition, income and
capital gains earned by these plans are sheltered from taxation until
withdrawal.
Individuals earning compensation generally may make IRA contributions of up
to $2,000 annually. However, the deductibility of an individual's IRA
contribution may be reduced or eliminated if the individual or, in the case
of a married individual, either the individual or the individual's spouse is
an active participant in an employer-sponsored retirement plan. In the case
of an active participant, the deduction will not be available for an
individual with adjusted gross income above $35,000, a married couple filing
a joint return with adjusted gross income above $50,000 and a married
individual filing separately with adjusted gross income above $10,000. In
addition, an individual with a non-working spouse may establish a separate
IRA for the spouse and annually contribute a total of up to $2,250 to the two
IRAs, provided that no more than $2,000 may be contributed to the IRA of
either spouse. The minimum investment to establish an IRA is $250 -- there
is no minimum for subsequent investments.
The master IRA plan also permits an IRA rollover of a lump sum distribution
from a qualified pension or profit-sharing plan. The participant may roll
over all or part of such a distribution into an IRA plan and thereby postpone
Federal income tax on that part of the distribution. The rollover must be
made within 60 days after receipt of the distribution. Rollovers must be
made directly from the plan to avoid certain withholding taxes.
Withdrawals from an IRA, other than that portion, if any, of the withdrawal
considered to be a return of the investor's non-deductible IRA contribution,
are taxed as ordinary income when received. Such withdrawals may be made
without penalty after the participant reaches age 59 1/2, and must commence
shortly after age 70 1/2. Withdrawals before age 59 1/2 or the failure to
commence withdrawals on a timely basis after age 70 1/2 may involve the
payment of certain penalties.
The Fund may also be used as a funding vehicle for 401(k) and other
retirement plans.
For more information call the Adviser at (800) 551-1980 or write to the Fund.
EXCHANGE PRIVILEGES
OTHER FUNDS. Shareholders of the Fund are entitled to exchange their shares
for shares of certain other investment companies managed by the Administrator
which participate in the
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<PAGE>
exchange privilege program. Currently, the exchange privilege program has
been established between the Fund and Investors Bond Fund, TaxSaver Bond Fund
and Daily Assets Treasury Fund (a money market fund), each a separate series
of Forum Funds, Inc. Shareholders may receive a copy of those funds'
prospectuses by writing the Transfer Agent or calling the Transfer Agent at
(800) 754-8758. These funds currently impose no exchange fee or sales charge
on Fund shareholders who exchange into them.
EXCHANGE PROCEDURES. Instructions for exchanges may be made in writing to
Transfer Agent at the address listed above. The minimum amount for an
exchange to open an account in those funds is $2,500. Exchanges may only be
made between identically registered accounts. A new account application is
required to open a new account through an exchange only if different
shareholder privileges are requested for the new account. The Fund reserves
the right to reject any exchange request and may modify or terminate the
exchange privilege at any time. There is no charge for the exchange privilege
or limitation as to frequency of exchanges.
An exchange of shares in the Fund pursuant to the exchange privilege is, in
effect, a redemption of Fund shares (at net asset value) followed by the
purchase of shares of the investment company into which the exchange is made
(at net asset value) and may result in a shareholder realizing a taxable gain
or loss for Federal income tax purposes. The exchange privilege is available
to shareholders residing in any state in which the investment company shares
being acquired may legally be sold.
TELEPHONE EXCHANGES. Shareholders who have elected telephone exchange
privileges may effect an exchange by telephoning the Transfer Agent at (800)
754-8758. The Fund and the Transfer Agent will employ reasonable procedures
in order to verify that telephone requests for exchanges are genuine,
including recording telephone instructions and causing written confirmations
of the resulting transactions to be sent to shareholders. Shareholders
should verify the accuracy of telephone instructions immediately upon receipt
of confirmation statements.
DIVIDENDS AND DISTRIBUTIONS
Each dividend and capital gain distribution, if any, declared by the Fund on
its outstanding shares will, at the election of each shareholder, be paid in
cash or in additional shares of common stock of the Fund having an aggregate
net asset value as of the payment date of such dividend or distribution equal
to the cash amount of such dividend or distribution. Election to receive
dividends and distributions in cash or shares is made at the time shares are
subscribed for and may be changed by notifying the Fund in writing at any
time prior to the record date for a particular dividend or distribution. If
the shareholder makes no election the Fund will make all distributions in
shares. There is no sales or other charge in connection with the
reinvestment of dividends and capital gain distributions.
While it is the intention of the Fund to distribute to its shareholders
substantially all of each fiscal year's net income (on a semi-annual basis)
and net realized capital gain, if any (on an annual basis), the amount and
time of any such distribution must necessarily depend upon the realization by
the Fund of income and capital gains from investments. There is no fixed
dividend
-14-
<PAGE>
rate, and there can be no assurance that the Fund will pay any dividends or
distribute any capital gains.
Reports containing appropriate information with respect to the Federal income
tax status of dividends and distributions paid during the year by the Fund
will be mailed to shareholders shortly after the close of each year.
TAXES
The Fund has qualified and intends to continue to qualify for tax treatment
as a "regulated investment company" under the Internal Revenue Code of 1986,
as amended. Qualification as a regulated investment company relieves the Fund
of Federal income tax on that part of its net ordinary income and net
realized capital gain which it pays out to its shareholders. Dividends out of
net ordinary income and distributions of net short-term capital gains are
taxable to the recipient shareholders as ordinary income. In the case of
corporate shareholders, such distributions are eligible for the
dividends-received deduction, to the extent that such dividends and
distributions are derived from qualifying dividends received by the Fund from
domestic corporations. A corporation's dividends-received deduction will be
disallowed unless the corporation holds shares in the Fund more than 46 days.
Furthermore, a corporation's dividends-received deduction will be disallowed
to the extent a corporation's investment in shares of the Fund is financed
with indebtedness.
The excess of net long-term capital gain over net short-term capital loss
realized and distributed by the Fund to its shareholders as capital gain
distributions are taxable to the shareholders as long-term capital gain,
irrespective of the length of time a shareholder may have held his stock.
Such long-term capital gain distributions are not eligible for the
dividends-received deduction referred to above. If a shareholder held shares
less than six months and during that period received a distribution taxable
to such shareholder as long-term capital gain, any loss realized on the sale
of such shares during such six month period would be a long-term loss to the
extent of such distribution.
Any dividend or distribution received by a shareholder on shares of the Fund
shortly after the purchase of the shares by him will have the effect of
reducing the net asset value of the shares by the amount of the dividend or
distribution. Furthermore, such dividend or distribution, although in effect
a return of capital, is subject to applicable taxes to the extent that the
investor is subject to such taxes regardless of the length of time he may
have held his stock.
Dividends and distributions declared by the Fund may be subject to state and
local taxes. Prior to investing in shares of the Fund a prospective
shareholder may wish to consult his tax adviser concerning the Federal, state
and local tax consequences of such an investment.
The Fund is required by Federal law to withhold 31% of reportable payments
(which may include dividends, capital gains distributions and redemptions)
paid to shareholders who have not complied with IRS regulations. In
connection with this withholding requirement, a shareholder will be asked to
certify on his application that the social security or tax identification
number
-15-
<PAGE>
provided is correct and that the shareholder is not subject to backup
withholding for previous under reporting to the IRS.
NET ASSET VALUE
The Fund determines the net asset value per share of the Fund on each Fund
Business Day as of 4:00 p.m., New York City time. Fund Business Day for this
purpose means weekdays (Monday through Friday) except customary national
business holidays and Good Friday. Net asset value per share is determined
by dividing the value of the Fund's net assets (i.e., the value of its
securities and other assets less its liabilities) by the number of shares
outstanding at the time the determination is made. Purchases and redemptions
will be effected at the time of determination of net asset value next
following the receipt of any purchase or redemption order. See "Purchase of
Shares" and "Redemption of Shares."
Portfolio securities for which market quotations are readily available are
valued at market value. All other investment assets of the Fund are valued
in such manner as the Board of Directors of the Fund in good faith deems
appropriate to reflect their fair value.
GENERAL INFORMATION
DESCRIPTION OF COMMON STOCK. The Fund was incorporated in Maryland on
February 19, 1985. The authorized capital stock of the Fund consists of one
hundred million shares of common stock having a par value of one-tenth of one
cent ($.001) per share. Each share has equal dividend, distribution,
liquidation and voting rights. There are no conversion or preemptive rights
in connection with any shares of the Fund. All shares when issued in
accordance with the terms of the offering will be fully paid and
non-assessable.
PERFORMANCE. From time to time the Fund may distribute sales literature or
publish advertisements containing "total return" quotations for the Fund.
Such sales literature or advertisements will disclose the Fund's average
annual compounded total return for a recent 12-month period and the period
since the Fund's inception, and may include total return information for
other periods. The Fund's total return for each period is computed, through
use of a formula prescribed by the SEC, by finding the average annual
compounded rates of return over the period that would equate an assumed
initial amount invested to the value of the investment at the end of the
period. For purposes of computing total return, income dividends and capital
gain distributions paid on shares of the Fund are assumed to have been
reinvested when received.
The Fund's advertisements may reference ratings and rankings among similar
funds by independent evaluators such as Morningstar, Value Line, Lipper
Analytical Services, Inc. or CDA/Wiesenberger. In addition, the performance
of the Fund may be compared to recognized indices of market performance. The
comparative material found in the Fund's advertisements, sales literature or
reports to shareholders may contain performance ratings. These are not to be
considered representative or indicative of future performance.
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<PAGE>
CUSTODIAN. The First National Bank of Boston, Boston, Massachusetts, is
custodian for the Fund's cash and securities.
INFORMATION FOR SHAREHOLDERS. All shareholder inquiries regarding
administrative procedures should be directed to the Adviser, Sound Shore
Management, Inc., P.O. Box 1810, 8 Sound Shore Drive, Greenwich, Connecticut
06836, (800) 551-1980. The Fund sends to all its shareholders semi-annual
unaudited and annual audited reports, including a list of investment
securities held.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, THE STATEMENT
OF ADDITIONAL INFORMATION AND THE FUND'S OFFICIAL SALES LITERATURE IN
CONNECTION WITH THE OFFERING OF THE FUND'S SHARES, AND IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE TRUST. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER IN ANY
STATE IN WHICH, OR TO ANY PERSON TO WHOM, SUCH OFFER MAY NOT LAWFULLY BE MADE.
TABLE OF CONTENTS
Prospectus Summary.................................
Expenses of Investing in the Fund..................
Financial Highlights...............................
Investment Objective and Policies..................
Investment Restrictions............................
Investment Adviser.................................
Administrator......................................
Shareholder Servicing and
Portfolio Accounting.............................
Purchase of Shares.................................
Redemption of Shares...............................
Retirement Plans...................................
Exchange Privileges................................
Dividends and Distributions........................
Taxes..............................................
Net Asset Value....................................
General Information................................
PROSPECTUS
MAY 1, 1996
Sound Shore Fund, Inc.
Two Portland Square
Portland, Maine 04101
-17-
<PAGE>
SOUND SHORE FUND, INC.
TWO PORTLAND SQUARE
PORTLAND, MAINE 04101
STATEMENT OF ADDITIONAL INFORMATION
MAY 1, 1996
Sound Shore Fund, Inc. (the "Fund") is a no-load, open-end, diversified,
management investment company. The Fund's investment objective is to seek
growth of capital and investments will be made based upon their potential for
capital growth. Therefore, current income, while considered important, will be
secondary to the objective of capital growth.
This Statement of Additional Information is not a Prospectus and is authorized
for distribution only when preceded or accompanied by the Fund's prospectus
dated May 1, 1996 (the "Prospectus"). This Statement of Additional Information
contains additional and more detailed information than that set forth in the
Prospectus and should be read only in conjunction with the Prospectus,
additional copies of which may be obtained without charge by writing the Fund at
the address set forth above or by calling the Fund's Investment Adviser at
(800) 551-980.
TABLE OF CONTENTS
INVESTMENT POLICIES................... REDEMPTION OF SHARES..............
SPECIAL INVESTMENT METHODS............ DESCRIPTION OF COMMON STOCK.......
INVESTMENT RESTRICTIONS............... PERFORMANCE.......................
MANAGEMENT............................ NET ASSET VALUE...................
EXPENSES.............................. COUNSEL AND AUDITORS..............
PORTFOLIO TRANSACTIONS FINANCIAL STATEMENTS..............
AND BROKERAGE.......................
<PAGE>
INVESTMENT POLICIES
The Fund expects that for most periods, a substantial portion, if not all, of
its assets will be invested in a diversified portfolio of common stocks judged
by Sound Shore Management, Inc. (the "Adviser") to have favorable value to price
characteristics. The Fund may also invest in US government or government agency
obligations, investment grade corporate bonds, preferred stocks, convertible
securities, and/or short-term money market instruments when deemed appropriate
by the Adviser. The investment policies of the Fund set forth above, and under
"Special Investment Methods" below, may be changed or altered by the Board of
Directors of the Fund (the "Board").
SPECIAL INVESTMENT METHODS
WARRANTS
The Fund may invest in warrants which entitle the holder to buy equity
securities at a specific price for a specific period of time. Warrants may be
considered more speculative than certain other types of investments in that they
do not entitle a holder to dividends or voting rights with respect to the
securities which may be purchased nor do they represent any rights in the assets
of the issuing company. Investments in warrants involve certain additional
risks, including the possible lack of a liquid market for the resale of the
warrants, potential price fluctuations as a result of speculation or other
factors and failure of the price of the underlying security to reach a level at
which the warrant can be prudently exercised (in which case the warrant may
expire without being exercised, resulting in the loss of the Fund's entire
investment therein). The Fund will not invest in warrants if (i) more than 5%
of the Fund's total assets would be invested in warrants or (ii) more than 2% of
the value of the Fund's total assets would be invested in warrants not listed on
the New York Stock Exchange or the American Stock Exchange.
REPURCHASE AGREEMENTS
The Fund may invest in repurchase agreements with major dealers in US Government
securities and member banks of the Federal Reserve System which are selected by
the Adviser in accordance with procedures approved by the Board. A repurchase
agreement is an instrument under which the purchaser (i.e., the Fund) acquires a
debt security and the seller agrees, at the time of the sale, to repurchase the
obligation at a mutually agreed upon time and price, thereby determining the
yield during the purchaser' holding period. This results in a fixed rate of
return insulated from market fluctuations during such period. The underlying
securities are ordinarily US Treasury or other government obligations or high
quality money market instruments and the Fund will monitor and require that the
value of such underlying securities always equal or exceed the amount of the
repurchase obligations of the borrower. While the maturities of the underlying
securities in repurchase agreement transactions may be more than one year, the
term of each repurchase agreement will always be less than one year. The Fund's
risk is limited to the ability of the seller to pay the agreed upon amount on
the delivery date. If the seller defaults, the underlying security constitutes
collateral for the seller's obligation to pay; in such event, the Fund might
suffer a loss to the extent that the proceeds from the sale of the collateral
were less
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<PAGE>
than the repurchase price. If the seller becomes bankrupt, the Fund might be
delayed in selling the collateral. Under the Investment Company Act of 1940
("1940 Act"), repurchase agreements are considered loans. The Fund is not,
however, restricted from investing in repurchase agreements under investment
restriction number 4 listed in the Prospectus. Repurchase agreements usually
are for short periods, such as one week or less, but could be longer. The Fund
will not enter into repurchase agreements of a duration of more than one week
if, taken together with illiquid securities and other securities for which there
are no readily available quotations, more than 10% of its total assets would be
so invested.
INVESTMENT RESTRICTIONS
The Fund has adopted the following investment restrictions which are in addition
to those described in the Prospectus. Under the following restrictions, which
may not be changed without the approval of the Fund' stockholders, the Fund may
not:
1. Purchase or otherwise acquire interests in real estate, real estate
mortgage loans or interests in oil, gas or other mineral exploration or
development programs;
2. Sell securities short or invest in puts, calls, straddles, spreads or
combinations thereof;
3. Purchase or acquire commodities or commodity contracts;
4. Issue senior securities, except insofar as the Fund may be deemed to have
issued a senior security in connection with any permitted borrowing;
5. Participate on a joint, or a joint and several, basis in any securities
trading account; or
6. Invest in companies for the purpose of exercising control.
The Fund has adopted the following nonfundamental investment restrictions, which
may be changed without the approval of the Fund's stockholders. The Fund may
not:
a. Invest in any oil, gas or other mineral lease.
b. Invest in the securities of other investment companies except to the extent
permitted by the 1940 Act.
MANAGEMENT
DIRECTORS AND OFFICERS
The directors and executive officers of the Fund, and their principal
occupations for the past five years, are listed below. Directors deemed to be
"interested persons"of the Fund for purposes of the 1940 Act are indicated by an
asterisk.
- 3 -
<PAGE>
DR. D. KENNETH BAKER, Director, is a physicist and is the retired President of
Harvey Mudd College. He is a trustee of the College and serves as a consultant
to several foundations. His address is 3088 Fairway Woods, Carolina Trace,
Sanford, North Carolina 27330.
HARRY BURN, III, M.B.A.*, Chairman and Director, is Chairman and Director of
Sound Shore Management, Inc. with which he has been associated since 1978. He
is a Chartered Financial Analyst. His address is that of the Adviser.
DR. MARK P. FIGGIE, Director, is a Physician in Orthopaedic Surgery at the
Hospital For Special Surgery and Cornell University Medical College and a Vice
President of Clark-Reliance Corp. His address is 535 East 70th Street, New
York, New York 10021.
CHARLES J. HEDLUND, Director, is currently a member of the Board of Trustees of
the American University in Cairo and a member of the Board of Trustees of
Conservation International of Washington, D.C. Mr. Hedlund was previously Vice
President, Exxon Corporation until 1980. His address is Country Club of
Florida, 58 Country Road South, Village of Golf, Florida 33436.
T. GIBBS KANE, JR.*, President and Director, is President and Director of Sound
Shore Management, Inc. with which he has been associated since 1977. He is a
Chartered Financial Analyst. His address is that of the Adviser.
JOHN L. LESHER, Director, is President of Resource Evaluation, Inc. from
March 1994. He is also a member of the board of Resource Evaluation, Ltd. as
well as First Industrial Real Estate Trust. Previously, he was Managing
Director of Korn Ferry International from 1989 to 1993. His address is 500
Mamaroneck Avenue, Harrison, New York 10528.
JOHN J. MCCLOY II, Director, is Co-Chairman of Noise Cancellation Technologies,
Inc. and is a Trustee of the American University in Cairo. His address is 1
Dock Street, Stamford, CT 06901.
WALTER R. NELSON, Director, is President of Nelson Publications, with which he
has been associated since 1974. His address is 60 Kirby Lane, Rye, New York
10580.
JOHN Y. KEFFER, Vice President, has been President and Director of Forum
Financial Services, Inc. for more than five years. He is also President and
Director of Forum Financial Corp. and Forum Advisors, Inc. (a registered
investment adviser). Mr. Keffer is also an officer, director or trustee of
various funds managed and distributed by Forum Financial Services, Inc. His
address is Two Portland Square, Portland, Maine 04101.
MICHAEL D. MARTINS, Treasurer, is Director of Fund Accounting, Forum Financial
Corp., with which he has been associated since 1995. Prior thereto, Mr. Martins
was at the audit firm of Deloitte & Touche LLP. Mr. Martins is also an officer
of various registered investment companies for which Forum Financial Services,
Inc. serves as manager, administrator and/or distributor. His address is Two
Portland Square, Portland, Maine 04101.
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<PAGE>
MICHAEL J. MCKEEN, Assistant Treasurer, is Fund Accounting Manager, Forum
Financial Corp., with which he has been associated since May 1993. Prior
thereto, Mr. McKeen attended college. His address is Two Portland Square,
Portland, Maine 04101.
SHANNA S. SULLIVAN, Secretary, is Vice President, Treasurer, Secretary and
Director of Sound Shore Management, Inc. with which she has been associated
since 1979. Her address is that of the Adviser.
ELLEN S. SMOLLER, Assistant Secretary, is an equity trader at Sound Shore
Management, Inc., with which she has been associated since 1984. Her address is
that of the Adviser.
MAX BERUEFFY, Assistant Secretary, is Counsel, Forum Financial Services, Inc.,
with which he has been associated since 1994. Prior thereto, Mr. Berueffy was
on the staff of the U.S. Securities and Exchange Commission for seven years,
first in the appellate branch of the Office of the General Counsel, then as a
counsel to Commissioner Grundfest and finally as a senior special counsel in the
Division of Investment Management. His address is Two Portland Square,
Portland, Maine 04101.
CHRISTOPHER J. KELLEY, Assistant Secretary, is Assistant Counsel, Forum
Financial Services, Inc., with which he has been associated since 1994. Prior
thereto and subsequent to attending law school, Mr. Kelley was employed at
Putnam Investments in legal and compliance capacities. His address is Two
Portland Square, Portland, Maine 04101.
The following table provides the fees paid to each Director of the Fund for the
fiscal year ended December 31, 1995. Mssrs. Burn and Kane are not compensated
as Directors of the Fund.
<TABLE>
<CAPTION>
Name of Person, Position Aggregate Pension Estimated Annual Total
Compensation Retirement Benefits Upon Compensation
From Fund Benefits Accrued Retirement From Fund Paid
As Part of Fund To Directors
Expenses
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Dr. D. Kenneth Baker
Director $4,500.00 $0.00 $0.00 $4,500.00
Dr. Mark P. Figgie
Director $4,500.00 $0.00 $0.00 $4,500.00
Charles J. Hedlund
Director $3,500.00 $0.00 $0.00 $3,500.00
John L. Lesher
Director $4,500.00 $0.00 $0.00 $4,500.00
John J. McCloy II
Director $4,500.00 $0.00 $0.00 $4,500.00
Walter R. Nelson
Director $4,500.00 $0.00 $0.00 $4,500.00
</TABLE>
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<PAGE>
ADVISER
The investment adviser to the Fund is Sound Shore Management, Inc., a Delaware
corporation with principal offices located at 8 Sound Shore Drive, Greenwich,
Connecticut 06836. The Adviser was, at May 1, 1996, investment adviser for
assets aggregating in excess of $1 billion. In addition to the Fund, the
Adviser' advisory clients include individuals, pension trusts, profit-sharing
trusts and endowments. Most of the accounts which are managed or advised by the
Adviser for these clients have investment objectives which may vary only
slightly from those of each other and those of the Fund. The Adviser invests
assets of such accounts in investments substantially similar to, those which
constitute the principal investments of the Fund. Such accounts are supervised
by officers and employees of the Adviser who may also be acting in similar
capacities for the Fund. It is the policy of the Adviser to allocate advisory
recommendations and the placing of orders in a manner which is deemed equitable
by the Adviser to the accounts involved, including the Fund. When two or more
of the clients of the Adviser (including the Fund) are purchasing the same
security on a given day from the same broker-dealer, such transactions may be
averaged as to price.
Pursuant to an Investment Advisory Agreement, the Adviser furnishes a continuous
investment program for the Fund's portfolio, makes the day-to-day investment
decisions for the Fund, executes the purchase and sale orders for the portfolio
transactions of the Fund and generally manages the Fund's investments in
accordance with the stated policies of the Fund, subject to the general
supervision of the Board.
The Adviser provides persons satisfactory to the Board to serve as officers of
the Fund. Such officers, as well as certain other employees and directors of
the Fund, may be directors, officers or employees of the Adviser. Messrs. Burn
and Kane, who are officers and/or directors of the Fund and officers and/or
directors of the Adviser, may be deemed "controlling persons" of the Adviser on
the basis of their ownership of the Adviser's stock.
As compensation for the services rendered and related expenses borne by the
Adviser under the Investment Advisory Agreement, the Fund pays the Adviser a
fee, computed daily and payable monthly, equal to 0.75% per annum of the Fund's
average daily net assets. The Adviser is obligated to reimburse the Fund in the
event certain of the Fund's expenses exceed certain prescribed limits. See
"Expenses." For the fiscal years ended December 31, 1993, December 31, 1994,
and December 31, 1995, the fees under the Investment Advisory Agreement were
$372,207, $452,025 and $485,139, respectively.
The Investment Advisory Agreement was approved on April 3, 1985 by the Board,
including a majority of the directors who are not interested persons (as defined
in the 1940 Act) of the Fund or the Adviser and by the sole stockholder of the
Fund on May 2, 1985. The Investment Advisory Agreement was also approved by the
Fund's public stockholders at an annual meeting held on July 22, 1986. The
Investment Advisory Agreement will continue in effect from year to year,
provided that continuance is specifically approved annually by the Board or by
vote of the stockholders, and in either case by a majority of the directors who
are not parties to the
- 6 -
<PAGE>
Investment Advisory Agreement or interested persons of any such party, by vote
cast in person at a meeting called for that purpose.
The Investment Advisory Agreement is terminable without penalty by the Fund on
sixty days' written notice when authorized either by majority vote of its
outstanding voting shares or by a vote of a majority of the Board, or by the
Adviser on sixty days' written notice, and will automatically terminate in the
event of its assignment. The Investment Advisory Agreement provides that in the
absence of willful misfeasance, bad faith or gross negligence on the part of the
Adviser, or of reckless disregard of its obligations thereunder, the Adviser
shall not be liable for any action or failure to act in accordance with its
duties thereunder.
ADMINISTRATOR AND DISTRIBUTOR
The administrator of the Fund is Forum Financial Services, Inc., a Delaware
corporation with principal offices at Two Portland Square, Portland, Maine 04101
("Forum"). As of May 1, 1996, Forum provided management, administrative and
distribution services to registered investment companies and collective
investment funds with assets of approximately $15.5 billion. Forum is a
registered broker-dealer and investment adviser and is a member of the National
Association of Securities Dealers, Inc. As of the date hereof, Forum is
controlled by John Y. Keffer, Vice President of the Fund.
As administrator, Forum administers all aspects of the Fund's operations subject
to the supervision of the Board except as set forth under "Adviser." Because of
the services rendered the Fund by Forum and the Adviser, the Fund itself
requires no employees other than its officers, none of whom receives
compensation from the Fund and all of whom are employed by the Adviser or Forum.
In connection with its responsibilities as administrator and in consideration of
its administrative fee, Forum supervises the overall administration of the Fund
(which includes, among other responsibilities, monitoring of performance and
billing of the transfer agent and custodian and arranging for maintenance of
books and records of the Fund), and provides the Fund with general office
facilities pursuant to an Administration Agreement with the Fund. The
Administration Agreement provides for an initial term of twelve months from its
effective date with respect to a Fund and for its automatic renewal each year
thereafter for an additional term of one year.
At the request of the Board, Forum provides persons satisfactory to the Board to
serve as officers of the Fund. Those officers, as well as certain other
employees and Directors of the Fund, may be directors, officers or employees of
Forum, the Adviser or their affiliates.
For its services under the Administration Agreement, Forum receives with respect
to the Fund an annual fee, computed daily and payable monthly, equal to 0.10% of
the average daily net assets of the Fund. The Administrator is obligated to
reimburse the Fund in the event certain of the Fund's exceed certain prescribed
limits. See "Expenses." For the fiscal years ended December 31, 1993, December
31, 1994 and December 31, 1995, the fees under the Administration Agreement were
$124,069, $150,675 and $161,713, respectively. For the fiscal year ended
December 31, 1995, the Administrator received a fee of 0.25% of the average
daily net assets of
- 7 -
<PAGE>
the Fund for its services under the then-existing Administration Agreement.
Under the new Administration Agreement, effective January 1, 1996, the
Administrator receives a fee of 0.10% but is no longer responsible for providing
portfolio accounting services.
Forum also acts as distributor of the Fund's shares pursuant to a Distribution
Agreement. Under the Distribution Agreement, Forum offers shares of the Fund on
a best efforts basis. Forum does not receive any fee for its services under the
Distribution Agreement.
The Administration Agreement and the Distribution Agreement are terminable by
either party on sixty days' written notice to the other. Each agreement
provides that in the absence of willful misfeasance, bad faith or gross
negligence on the part of Forum, or of reckless disregard of its obligations
thereunder, Forum shall not be liable for any action or failure to act in
accordance with its duties thereunder.
TRANSFER AGENT
Forum Financial Corp. (the "Transfer Agent") acts as transfer agent and dividend
disbursing agent of the Fund pursuant to a Transfer Agency Agreement. Among the
responsibilities of the Transfer Agent as agent for the Fund are: answering
customer inquiries regarding account status and history, the manner in which
purchases and redemptions of shares of the Funds may be effected and certain
other matters pertaining to the Fund; assisting shareholders in initiating and
changing account designations and addresses; furnishing periodic statements and
confirmations of purchases and redemptions; and providing such other related
services as the Fund or a shareholder may reasonably request.
PORTFOLIO ACCOUNTING
Forum Accounting Services LLC ("FAS"), an affiliate of Forum, performs portfolio
accounting services for the Fund pursuant to a Fund Accounting Agreement. The
Fund Accounting Agreement will continue in effect only if such continuance is
specifically approved at least annually by the Board or by a vote of the
shareholders of the Fund and in either case by a majority of the Directors who
are not parties to the Fund Accounting Agreement or interested persons of any
such party, at a meeting called for the purpose of voting on the Fund Accounting
Agreement.
Under its agreement, FAS prepares and maintains books and records of the Fund
that are required to be maintained under the 1940 Act, calculates the net asset
value per share of the Fund and dividends and capital gain distributions and
prepares periodic reports to shareholders and the SEC. FAS is required to use
its best judgment and efforts in rendering fund accounting services and is not
liable to the Fund for any action or inaction in the absence of bad faith,
willful misconduct or gross negligence. FAS is not responsible or liable for
any failure or delay in performance of its fund accounting obligations arising
out of or caused, directly or indirectly, by circumstances beyond its reasonable
control and the Fund has agreed to indemnify and hold harmless the Fund, its
employees, agents, officers and Directors against and from any and all claims,
judgments, losses, charges (including attorneys' fees) and other reasonable
expenses
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<PAGE>
arising out of or in any way related to FAS's actions taken or failures to act
with respect to a Fund or based, if applicable, upon information, instructions
or requests with respect to a Fund given or made to FAS by a duly authorized
officer of the Fund. This indemnification does not apply to FAS's actions or
failures to act in cases of FAS's own bad faith, willful misconduct or gross
negligence.
The Fund Accounting Agreement became effective on January 1, 1996. Prior
thereto, Forum was responsible for performing fund accounting services pursuant
to the then-existing Administration Agreement with the Fund, which had
provisions identical in all material respects to the Fund Accounting Agreement.
EXPENSES
Except as set forth above under "Adviser" and "Administrator and Distributor,"
the Fund is responsible for the payment of its expenses. Without limitation,
such expenses include the fees payable to the Adviser and Administrator; the
organizational expenses payable to the Adviser; any brokerage fees and
commissions; taxes; interest; the cost of any liability insurance or fidelity
bonds; legal and auditing fees and expenses; the fees and certain expenses of
the Fund's custodian and transfer and dividend disbursing agent; the fees of any
trade association of which the Fund is a member; the expenses of printing and
mailing reports and notices to the Fund's stockholders; filing fees for the
registration or qualification of Fund shares under federal or state securities
laws; the fees and expenses involved in registering and maintaining registration
of the Fund and of its shares with the SEC; the costs of registering the Fund as
a broker or dealer; the costs of qualifying the Fund's shares under state
securities laws; the expenses of servicing stockholders and stockholder
accounts; and any extraordinary expenses incurred by the Fund.
The Investment Advisory Agreement and the Administration Agreement include
provisions allowing the Adviser and Forum, respectively, to defray the cost of,
or compensate other persons, including banks, broker-dealers and other
organizations whose customers or clients are Fund stockholders, for providing
stockholder servicing and related administrative and accounting functions on
behalf of the Fund. Under such agreements, the Adviser and Forum may also
compensate the foregoing persons and organizations for providing assistance in
distributing the Fund's shares. Such agreements further contemplate that the
Adviser and Forum may arrange to compensate sales personnel and to pay for the
preparation and printing of brochures and other promotional materials, mailings
to prospective stockholders, advertising and other activities in connection with
the distribution of the Fund's shares.
The Adviser and Forum have each agreed that if in any fiscal year the sum of the
Fund's expenses exceeds the limits set by applicable regulations of state
securities commissions, the amounts payable by the Fund to the Adviser for the
advisory fee and to Forum for the administration fee for that year shall each be
reduced by 75% and 25%, respectively, of the amount of such excess. However, if
the excess should be greater than the amounts payable to the Adviser and Forum
in that year, the Adviser and Forum shall each pay to the Fund 75% and 25%,
respectively, of the difference between such excess and the fees of the Adviser
and Administrator for that year. For the purpose of this calculation, expenses
shall include the fees
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<PAGE>
payable to the Adviser and Forum and the amortization of organization expenses
paid to the Adviser, but shall exclude taxes, interest, brokerage and
extraordinary expenses.
PORTFOLIO TRANSACTIONS AND BROKERAGE
The Adviser is responsible for decisions to buy and sell securities for the
Fund, the selection of brokers and dealers to effect the transactions and the
negotiation of brokerage commissions. Purchases and sales of securities on a
securities exchange are effected through brokers who charge a commission for
their services. Brokerage commissions on United States securities exchanges are
subject to negotiation between the Adviser and the broker.
In the over-the-counter market, securities are generally traded on a "net" basis
with dealers acting as principal for their own accounts without a stated
commission, although the price of the security usually includes a profit to the
dealer. In underwritten offerings, securities are purchased at a fixed price
which includes an amount of compensation to the underwriter, generally referred
to as the underwriter's concession or discount. On occasion, certain money
market instruments may be purchased directly from an issuer, in which case no
commissions or discounts are paid.
In placing orders for portfolio securities of the Fund, the Adviser is required
to give primary consideration to obtaining the most favorable price and
efficient execution. Within the framework of this policy, the Adviser will
consider the research and investment services provided by brokers or dealers who
effect or are parties to portfolio transactions of the Fund or the Adviser's
other clients. Such research and investment services are those which brokerage
houses customarily provide to institutional investors and include statistical
and economic data and research reports on particular companies and industries.
Such services are used by the Adviser in connection with all of its investment
activities, and some of such services obtained in connection with the execution
of transactions for the Fund may be used in managing other investment accounts.
Conversely, brokers furnishing such services may be selected for the execution
of transactions of such other accounts, and the services furnished by such
brokers may be used by the Adviser in providing investment management for the
Fund. Commission rates are established pursuant to negotiations with the broker
based on the quality and quantity of execution services provided by the broker
in light of generally prevailing rates. The Adviser's policy is to pay higher
commissions to brokers for particular transactions than might be charged if a
different broker had been selected on occasions when, in the Adviser's opinion,
this policy furthers the objective of obtaining the most favorable price and
execution. In addition, the Adviser is authorized to pay higher commissions on
brokerage transactions for the Fund to brokers in order to secure research and
investment services described above, subject to review by the Board from time to
time as to the extent and continuation of the practice. The allocation of
orders among brokers and the commission rates paid are reviewed periodically by
the Board.
During the fiscal years December 31, 1993, December 31, 1994 and December 31,
1995, the Fund paid a total of $161,628, $152,332 and $145,962, respectively, in
brokerage commissions with respect to portfolio transactions aggregating
$61,728,355, $65,729,499 and $63,613,535,
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<PAGE>
respectively. Such transactions were placed with brokers or dealers who provide
research and investment services.
REDEMPTION OF SHARES
Payment of the redemption price for shares redeemed may be made either in cash
or in portfolio securities (selected in the discretion of the Board and taken at
their value used in determining the Funds net asset value per share as described
under "Net Asset Value"), or partly in cash and partly in portfolio securities.
However, payments will be made wholly in cash unless the Board believes that
economic conditions exist which would make such a practice detrimental to the
best interests of the Fund. If payment for shares redeemed is made wholly or
partly in portfolio securities, brokerage costs may be incurred by the investor
in converting the securities to cash. The Fund will not distribute in kind
portfolio securities that are not readily marketable. The Fund has filed a
formal election with the SEC pursuant to which the Fund will only effect a
redemption in portfolio securities where the particular stockholder of record is
redeeming more than $250,000 or 1% of the Fund's total net assets, whichever is
less, during any 90-day period. In the opinion of the Fund's management,
however, the amount of a redemption request would have to be significantly
greater than $250,000 or 1% of total net assets before a redemption wholly or
partly in portfolio securities would be made.
DESCRIPTION OF COMMON STOCK
As of April 10, 1996, the amount of shares owned by all officers and directors
of the Fund, as a group, was 3.09% of the Fund's outstanding shares. Set forth
below is certain information as to persons who owned 5% or more of the Fund's
outstanding common stock as of April 10, 1996:
Nature
Name and Address % of Shares of Ownership
- ---------------- ----------- ------------
Figgie International, Inc. 20.30% Beneficial
Retirement Savings Plan 401(K)
4420 Sherwin Road
Willoughby, OH 44094
Employees Profit Sharing Plan 7.88% Beneficial
of Sound Shore Management, Inc.
P.O. Box 1810
Greenwich, CT 06836
PERFORMANCE
From time to time the Fund may distribute sales literature or publish
advertisements containing "total return" quotations for the Fund. Such sales
literature or advertisements will disclose the Fund's average annual compounded
total return for a recent 12-month period and the period since the Fund's
inception, and may include total return information for other periods. The
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<PAGE>
Fund's total return for each period is computed, through use of a formula
prescribed by the SEC, by finding the average annual compounded rates of return
over the period that would equate an assumed initial amount invested to the
value of the investment at the end of the period. For purposes of computing
total return, income dividends and capital gains distributions paid on shares of
the Fund are assumed to have been reinvested when received.
The Fund's total return for the fiscal year ended December 31, 1995 was 29.87%.
The Fund's average annual total returns for the 5 year and 10 year periods ended
December 31, 1995 were 18.49% and 13.63%, respectively.
The Fund's total return is not fixed and will fluctuate in response to
prevailing market conditions or as a function of the type and quality of the
securities in the Fund's portfolio and the Fund's expenses. Total return
information is useful in reviewing the Fund's performance but such information
may not provide a basis for comparison with bank deposits or other investments
which pay a fixed return for a stated period of time. An investor's principal
invested in the Fund is not fixed and will fluctuate in response to prevailing
market conditions.
In performance advertising the Fund may compare any of its performance
information with data published by independent evaluators such as Morningstar,
Lipper Analytical Services, Inc., CDA/Wiesenberger or other companies which
track the investment performance of investment companies ("Fund Tracking
Companies"). The Fund may also compare any of its performance information with
the performance of recognized stock, bond and other indexes, including but not
limited to the Standard & Poor's 500 Composite Stock Price Index, the Standard &
Poor's 100 Composite Stock Price Index, the Dow Jones Industrial Average, the
Salomon Brothers Bond Index, the Shearson Lehman Bond Index, US Treasury bonds,
bills or notes and changes in the Consumer Price Index as published by the US
Department of Commerce. The Fund may refer to general market performances over
past time periods. The Fund may also refer in such materials to mutual fund
performance rankings and other data published by Fund Tracking Companies.
Performance advertising may also refer to discussions of the Fund and
comparative mutual fund data and ratings reported in independent periodicals,
such as newspapers and financial magazines.
NET ASSET VALUE
The Fund does not determine its net asset value per share on the following
holidays: New Year's Day, President's Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving and Christmas.
For purposes of determining the Fund's net asset value per share, readily
marketable portfolio securities listed on the New York Stock Exchange are
valued, except as indicated below, at the last sale price reflected on the
consolidated tape at the close of the New York Stock Exchange on the business
day as of which such value is being determined. If there has been no sale on
such day, the securities are valued at the mean of the closing bid and asked
prices are quoted on such day, then the security is valued by such method as the
Board shall determine in good faith to reflect its fair market value. Readily
marketable securities not listed on the New York Stock
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<PAGE>
Exchange but listed on other national securities exchanges or admitted to
trading on the National Association of Securities Dealers Automated Quotations,
Inc. ("NASDAQ") National List are valued in like manner. Portfolio securities
traded on more than one national securities exchange are valued at the last sale
price on the business day as of which such value is being determined as
reflected on the tape at the close of the exchange representing the principal
market for such securities.
Readily marketable securities traded in the over-the-counter market, including
listed securities whose primary market is believed by the Adviser to be
over-the-counter, but excluding securities admitted to trading on the NASDAQ
National List, are valued at the mean of the current bid and asked prices as
reported by NASDAQ or, in the case of securities not quoted by NASDAQ, the
National Quotation Bureau or such other comparable sources as the Board of
Directors deems appropriate to reflect their fair market value.
United States government obligations and other debt instruments having sixty
days or less remaining until maturity are stated at amortized cost. All other
investment assets, including restricted and not readily marketable securities,
are valued in such manner as the Board in good faith deems appropriate to
reflect their fair market value.
COUNSEL AND AUDITORS
Legal matters in connection with the issuance of shares of stock of the Fund are
passed upon by Messrs. Dechert Price & Rhoads, 477 Madison Avenue, New York, New
York 10022. Dechert Price & Rhoads has relied upon the opinion of Venable,
Baetjer and Howard, Baltimore, Maryland, for matters relating to Maryland law.
Deloitte & Touche LLP, 2 World Financial Center, New York, NY 10281,
independent certified public accountants, have been selected as auditors for the
Fund.
FINANCIAL STATEMENTS
The financial statements of the Fund for the year ended December 31, 1995, which
are included in the Annual Report to Shareholders of the Company and delivered
along with this Statement of Additional Information, are incorporated herein by
reference.
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PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements.
Included in Prospectus: Financial Highlights.
Included in the Statement of Additional Information:
Independent Auditors' Report for the year ended December 31, 1995;
Statement of Net Assets as of December 31, 1995; Statement of Operations
for the year ended December 31, 1995; Statement of Changes in Net Assets
for the years ended December 31, 1995 and 1994; Notes to Financial
Statements; Financial Highlights.
(b) Exhibits:
(1) Articles of Incorporation of Registrant (filed herewith).
(2) By-Laws of Registrant (filed herewith).
(3) None.
(4) Form of certificate for shares of stock of Registrant (filed herewith).
(5) Investment Advisory Agreement between Registrant and Sound Shore
Management, Inc. dated May 3, 1985 and restated March 14, 1995 (filed
herewith).
(6) Distribution Agreement between Registrant and Forum Financial Services,
Inc. dated June 8, 1993 (filed herewith).
(7) None.
(8) Custody Agreement between the Registrant and The First National Bank of
Boston dated April 30, 1993 (filed herewith).
(9) (a) Administration Agreement between the Registrant and Forum Financial
Services, Inc. dated January 1, 1996 (filed herewith).
(b) Transfer Agency Agreement between the Registrant and Forum
Financial Corporation dated January 1, 1996 (filed herewith).
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(c) Transfer Agency Agreement between the Registrant and Forum
Accounting Services LLC dated January 1, 1996 (filed herewith).
(10) Opinion of Seward & Kissel (Exhibit 10 to Pre-Effective Amendment No. 1
to Registration Statement on Form N-1A filed on April 30, 1985 (File Nos.
2-96141 and 811-4244) and incorporated herein by reference).
(11) (a) Opinion of Messrs. Venable, Baetjer and Howard (Exhibit 11(a) to
Pre-Effective Amendment No. 1 to Registration Statement on Form N-
1A filed on April 30, 1985 (File Nos. 2-96141 and 811-4244) and
incorporated herein by reference).
(b) Consent of Independent Auditors (filed herewith).
(13) Investment representation letter of Employees' Profit-Sharing Plan of
McConnell & Miller, Inc. as initial purchaser of shares of stock of the
Registrant (Exhibit 13 to Pre-Effective Amendment No. 1 to Registration
Statement on Form N-1A filed on April 30, 1985 (File Nos. 2-96141 and
811-4244) and incorporated herein by reference).
(14) None.
(15) Revised Rule 12b-1 Plan adopted by Registrant (Exhibit 15 to Pre-
Effective Amendment No. 1 to Registration Statement on Form N-1A file
April 30, 1985 (File Nos. 2-96141 and 811-4244) and incorporated herein
by reference).
(16) Not Applicable.
Other Exhibits:
Powers of Attorney of T. Gibbs Kane, Harry Burn, III, John L. Lesher,
Charles J. Hedlund, Mark P. Figgie, D. Kenneth Baker, John J. McCloy and
Walter R. Nelson (filed herewith).
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
None.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES.
The following information is furnished as of April 10, 1996:
Title of Class Number of Record Holders
-------------- ------------------------
Common Stock, par value $.001 per share 378
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ITEM 27. INDEMNIFICATION
The Registrant's Articles of Incorporation and Maryland law provide for
indemnification by the Registrant of officers and directors under certain
circumstances. In accordance with Section 2-418 of the General Corporation Law
of the State of Maryland, Article EIGHTH of the Registrant's Articles of
Incorporation provides as follows:
"EIGHTH: To the maximum extent permitted by the General Corporation Law
of the State of Maryland as from time to time amended, the Corporation shall
indemnify its currently acting and its former directors and officers and those
persons who, at the request of the Corporation, serve or have served another
corporation, partnership, joint venture, trust or other enterprise in one or
more of such capacities."
Further, the Registrant has agreed to indemnify (1) Sound Shore
Management, Inc. ("Sound Shore Management") in the Investment Advisory
Agreement, (2) Forum Financial Services, Inc. ("Forum") in the Distribution
Agreement, (3) Forum in the Distribution Agreement, (4) Forum Financial Corp.
("FFC") in the Transfer Agency Agreement, and (5) Forum Accounting Services LLC
("FAS") in the Fund Accounting Agreement for certain liabilities and expenses
arising out of their acts or omissions under the respective agreements.
Paragraph 4 of the Investment Advisory Agreement between the Registrant
and Sound Shore Management provides generally that Sound Shore Management will
not be liable for any mistake of judgment or for any other cause but shall not
be protected against any liability due to willful misfeasance, bad faith or
gross negligence in the performance of or reckless disregard of the adviser's
duties.
Section 2(f) of the Distribution Agreement the Registrant and Forum
provides generally that the Registrant will indemnify, defend and hold harmless
from and against any and all claims, demands, liabilities and expenses which
Forum may incur arising out of or based upon any alleged untrue statement of a
material fact contained in the Registrant's Registration Statement or Prospectus
or arising out of or based upon any alleged omission to state a material fact,
provided that Forum will not be protected against any liability to the
Registrant or its security holders to which Forum would otherwise be subject by
reason of willful misfeasance, bad faith, or gross negligence in the performance
of or reckless disregard of the Forum's duties.
Section 3(a) of the Administration Agreement between the Registrant and
Forum provides generally that Forum shall not be liable to the Registrant for
any action or inaction of Forum in the absence of bad faith, willful misconduct
or gross negligence or based upon information, instructions or requests made to
Forum by an officer of the Registrant duly authorized or caused by circumstances
beyond Forum's reasonable control. Section 3(b) provides that the Registrant
will indemnify and hold harmless Forum from and against any and all claims,
demands, liabilities and expenses arising out of any action or inaction for
which Forum is not liable under the agreement.
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Section 25 of the Transfer Agency Agreement between the Registrant and
FFC provides generally that FFC shall not be liable for any non-negligent action
taken in good faith and reasonably believed by FFC to be within the powers
conferred upon it by the agreement, and that the Registrant shall indemnify FFC
and hold it harmless from and against any and all claims, damages, liabilities
and expenses arising out performance of the agreement; provided such loss,
claim, damage, liability or expense is not the result of FFC's gross negligence
or willful misconduct.
Section 4(a) of the Fund Accounting Agreement between the Registrant and
FAS provides generally that FAS shall not be liable to the Registrant for any
action or inaction of FAS in the absence of bad faith, willful misconduct or
gross negligence or based upon information, instructions or requests made to FAS
by an officer of the Registrant duly authorized or caused by circumstances
beyond FAS's reasonable control. Section 4(b) provides that the Registrant will
indemnify and hold harmless FAS from and against any and all claims, demands,
liabilities and expenses arising out of any action or inaction for which Forum
is not liable under the agreement.
The foregoing references are qualified in their entirety by the
Registrant's Articles of Incorporation and the respective agreements.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Securities Act") may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
the Registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
The description of Sound Shore Management, Inc. (the "Adviser"), 8 Sound
Shore Drive, Greenwich, Connecticut 06836 under the captions "Investment
Adviser" in the Prospectus and "Management" in the Statement of Additional
Information constituting Parts A and B, respectively, of this Registration
Statement are incorporated herein by reference. The following are the directors
and principal executive officers of the Adviser, including their business
connections which are of a substantial nature.
Harry Burn, III, Chairman and a Director, is a Director.
T. Gibbs Kane, Jr., President.
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<PAGE>
Shanna S. Sullivan, Vice President, Treasurer and Secretary and a
Director.
ITEM 29. PRINCIPAL UNDERWRITERS.
(a) Forum Financial Services, Inc., Registrant's underwriter, serves as
underwriter to Avalon Capital, Inc., Core Trust (Delaware), The CRM Funds, The
Cutler Trust, Forum Funds, Monarch Funds, Norwest Advantage Funds, Norwest
Select Funds, Sound Shore Fund, Inc., Stone Bridge Funds, Inc. and Trans Adviser
Funds, Inc.
(b) John Y. Keffer, President and Secretary of Forum Financial Services,
Inc., is the Chairman and President of the Registrant. David R. Keffer is the
Vice President and Treasurer of Forum Financial Services, Inc. Their business
address is Two Portland Square, Portland, Maine.
(c) Not Applicable.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS.
The majority of the accounts, books and other documents required to be
maintained by Section 31(a) of the Investment Company Act of 1940 and the Rules
thereunder are maintained at the offices of Forum Financial Services, Inc., 61
Broadway, New York, New York 10006 and Forum Financial Corp., Two Portland
Square, Portland, Maine 04104. The records required to be maintained under Rule
31a-1(b)(1) with respect to journals of receipts and deliveries of securities
and receipts and disbursements of cash are maintained at the offices of the
Registrant's custodian, as listed under "Custodian" in Part B to this
Registration Statement. The records required to be maintained under Rule 31a-
1(b)(5), (6) and (9) are maintained at the offices of the Registrant's adviser,
as listed in Item 28 hereof.
ITEM 31. MANAGEMENT SERVICES.
Not applicable.
ITEM 32. UNDERTAKINGS.
Registrant undertakes to furnish each person to whom a prospectus is
delivered with a copy of Registrant's latest annual report to shareholders upon
request and without charge.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it meets all of the
requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this
amendment to its Registration Statement to be signed on its behalf by the
undersigned, thereto duly authorized, in the City of New York, State of New
York on the 30th day of April, 1996.
SOUND SHORE FUND, INC.
By: /s/ T. Gibbs Kane, Jr.
President
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement amendment has been signed below by the following persons on the
30th day of April, 1996.
SIGNATURES TITLE
(a) Principal Executive Officer
/s/ T. GIBBS KANE, JR. President and Trustee
(b) Principal Financial and Accounting Officer
/s/ MICHAEL D. MARTINS Treasurer
(c) Majority of the Directors
/s/ T. GIBBS KANE, JR. Trustee
DR. D. KENNETH BAKER* Trustee
HARRY BURN, III* Trustee
DR. MARK P. FIGGIE* Trustee
CHARLES J. HEDLUND* Trustee
JOHN L. LESHER* Trustee
JOHN J. McCLOY, II* Trustee
WALTER R. NELSON* Trustee
By: /s/ T. Gibbs Kane, Jr.
-------------------------------------
T. Gibbs Kane, Jr., Attorney-in-Fact*
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Index to Exhibits
Sequential
Exhibit Page Number
- ------- -----------
1 Articles of Incorporation
2 By-Laws
4 Form of Certificate for shares of beneficial
interest of each class of each portfolio of Registrant
5 Investment Advisory Agreement between Registrant
and Sound Shore Management, Inc. dated May 3, 1985
and restated March 14, 1995
6 Distribution Agreement between Registrant
and Forum Financial Services, Inc., relating to each
portfolio of Registrant, dated June 8, 1993.
8(a) Custodian Agreement between Registrant and
The First National Bank of Boston, dated April 30, 1993.
(b) Transfer Agency Agreement between registrant and
Forum Financial Corp., dated January 1, 1996.
9(a) Administration Agreement between Registrant and
Forum Financial Services, Inc., dated January 1, 1996.
(b) Fund Accounting Agreement between Registrant and
Forum Accounting Services LLC, dated January 1, 1996.
(c) Administrative Services Agreement between Registrant
and Forum Financial Services, Inc., dated March 15, 1994.
11 Consent of Independent Auditors.
27 Financial Data Schedule
Other Exhibits
Powers of Attorney of T. Gibbs Kane, Harry Burn, III,
John L. Lesher, Charles J. Hedlund, Mark P. Figgie,
D. Kenneth Baker, John J. McCloy and Walter R. Nelson
<PAGE>
EXHIBIT 1
<PAGE>
ARTICLES OF INCORPORATION
OF
SOUND SHORE FUND, INC.
FIRST: (1) The name of the incorporator is Richard A. Bershtein.
(2) The incorporator's post office address is Wall Street Plaza,
New York, New York 10005.
(3) The incorporator is over eighteen years of age.
(4) The incorporator is forming the corporation named in these
Articles of Incorporation under the general laws of the State of Maryland.
SECOND: The name of the corporation (hereinafter called the "Corporation")
is Sound Shore Fund, Inc.
THIRD: The purposes for which the Corporation is formed are:
(a) to conduct, operate and carry on the business of an
investment company;
(b) to subscribe for, invest in, reinvest in, purchase or
otherwise acquire, hold, pledge, sell, assign, transfer, exchange,
distribute or otherwise dispose of notes, bills, bonds, debentures and
other negotiable or non-negotiable instruments, obligations and evidences
of indebtedness issued or guaranteed as to principal and interest by
foreign governments, the United States Government, or any agencies or
instrumentalities thereof, any State or local government, or any agency or
instrumentality thereof, or any other securities of any kind issued by any
corporation or other issuer organized under the laws of any foreign
country, the United States or any State, territory, possession or sub-
division thereof or otherwise, to pay for the same in cash or by the issue
of stock, including treasury stock, bonds or notes of the Corporation or
otherwise; and to exercise any and all rights, powers and privileges of
ownership or interest in respect of any and all such investments of every
kind and description, including, without limitation, the right to consent
and otherwise act with respect thereto, with power to designate one or more
persons, firms, associations or corporations to exercise any of said
rights, powers and privileges in respect of any said investments;
(c) to conduct foreign currency exchange transactions either on
a cash basis or through entering into forward foreign currency contracts to
purchase and sell foreign currencies;
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(d) to conduct research and investigations in respect of
securities, organizations, business and general business and financial
conditions throughout the world for the purpose of obtaining information
pertinent to the investment and employment of the assets of the Corporation
and to procure any or all of the foregoing to be done by others as
independent contractors and to pay compensation therefor;
(e) to borrow money or otherwise obtain credit and to secure the
same by mortgaging, pledging or otherwise subjecting as security the assets
of the Corporation, and to endorse, guarantee or undertake the performance
of any obligation, contract or engagement of any other person, firm,
association or corporation;
(f) to issue, sell, distribute, repurchase, redeem, retire,
cancel, acquire, hold, resell, reissue, dispose of, transfer and otherwise
deal in, shares of stock of the Corporation, including shares of stock of
the Corporation in fractional denominations, and to apply to any such
repurchase, redemption, retirement, cancellation or acquisition of shares
of stock of the Corporation, any funds or property of the Corporation,
whether capital or surplus or otherwise, to the full extent now or
hereafter permitted by the laws of the State of Maryland and by these
Articles of Incorporation;
(g) to conduct its business, promote its purposes, and carry on
its operations in any and all of its branches and maintain offices both
within and without the State of Maryland, in any and all foreign countries,
in any and all States of the United States of America, in the District of
Columbia, and in any or all commonwealths, territories, dependencies,
colonies, possessions, agencies or instrumentalities of the United States
of America and of foreign governments;
(h) to carry out all or any part of the foregoing purposes or
objects as principal or agent, or in conjunction with any other person,
firm, association, corporation or other entity, or as a partner or member
of a partnership, syndicate or joint venture or otherwise, and in any part
of the world to the same extent and as fully as natural persons might or
could do;
(i) to have and exercise all of the powers and privileges
conferred by the laws of the State of Maryland upon corporations formed
under the laws of such State; and
(j) to do any and all such further acts and things and to
exercise any and all such further powers and privileges as may be
necessary, incidental, relative, conducive, appropriate or desirable for
the foregoing purposes.
The enumeration herein of the objects and purposes of the Corporation shall
be construed as powers as well as objects and purposes and shall not be deemed
to exclude by inference any powers, objects or purposes which the Corporation is
empowered to exercise, whether expressly by force of the laws of the State of
Maryland now or hereafter in effect, or impliedly by the reasonable construction
of the said laws.
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FOURTH: The post office address of the principal office of the Corporation
within the State of Maryland is 32 South Street, Baltimore, Maryland 21202, in
the care of The Corporation Trust, Incorporated.
The resident agent of the Corporation in the State of Maryland is The
Corporation Trust, Incorporated, 32 South Street, Baltimore, Maryland 21202.
FIFTH: (1) The total number of shares of stock of all classes which the
Corporation shall have authority to issue is One Hundred Million (100,000,000),
all of which stock shall have a par value of one tenth of one cent ($.001) per
share. The aggregate par value of all authorized shares of stock of the
Corporation is One Hundred Thousand Dollars ($100,000).
(2) (a) The Board of Directors of the Corporation is authorized
to classify or to reclassify, from time to time, any unissued shares of
stock of the Corporation, whether now or hereafter authorized, by setting,
changing or eliminating the preferences, conversion or other rights, voting
powers, restrictions, limitations as to dividends, and qualifications or
terms and conditions of or rights to require redemption of the stock and,
pursuant to such classification or reclassification, to increase or
decrease the number of authorized shares of any class, but the number of
shares of any class shall not be reduced by the Board of Directors below
the number of shares thereof then outstanding.
(b) Without limiting the generality of the foregoing, the
dividends and distributions of investment income and capital gains with
respect to the stock of the Corporation, and with respect to each class
that hereafter may be created, shall be in such amount as may be declared
from time to time by the Board of Directors, and such dividends and
distributions may vary from class to class to such extent and for such
purposes as the Board of Directors may deem appropriate, including, but not
limited to, the purpose of complying with requirements of regulatory or
legislative authorities.
(c) Without limiting the generality of the foregoing, the
Board of Directors may designate, from time to time, any unissued shares of
stock of the Corporation, whether now or hereafter authorized, as a class
or classes or a number of series of preferred or special stock that is
excluded from the definition of "senior security" set forth in Section
18(g) of the Investment Company Act of 1940, as amended (or in a successor
statute), by virtue of Section 18(f)(2) of said Act (or a successor
statute).
(3) Until such time as the Board of Directors shall provide
otherwise pursuant to the authority granted in Section (2) of this Article
FIFTH, the One Hundred Million (100,000,000) authorized shares of stock of the
Corporation are designated as Common Stock. Shares of the Common Stock and the
holders thereof, and shares of any class or series of the type referred to in
Subsection (c) of Section 2 of this Article FIFTH and the holders thereof, shall
be subject to the following provisions, provided, however, that if no shares of
any class or series of the type referred to in Subsection (c) of Section (2) of
this Article FIFTH are outstanding, the shares of the Common Stock and the
holders thereof shall nevertheless be subject to the
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following provisions except to the extent that such provisions are by their
terms applicable only when shares of two or more classes are outstanding.
(a) As more fully set forth hereafter, the assets and
liabilities and the income and expenses of each class of the Corporation's
stock shall be determined separately and, accordingly, the net asset value,
the dividends payable to holders, and the amounts distributable in the
event of dissolution of the Corporation to holders, of shares of the
Corporation's stock may vary from class to class. Except for these
differences and certain other differences hereafter set forth, each class
of the Corporation's stock shall have the same preferences, conversion and
other rights, voting powers, restrictions, limitations as to dividends,
qualifications and terms and conditions of any rights to require
redemption.
(b) All consideration received by the Corporation for the
issue or sale of shares of a class of the Corporation's stock, together
with all income, earnings, profits, and proceeds thereof, including any
proceeds derived from the sale, exchange or liquidation thereof, and any
funds or payments derived from any reinvestment of such proceeds in
whatever form the same may be, shall irrevocably belong to that class for
all purposes, subject only to the rights of creditors, and shall be so
recorded upon the books of account of the Corporation. Such consideration,
income, earnings, profits, and proceeds thereof, including any proceeds
derived from the sale, exchange or liquidation thereof, and any funds or
payments derived from any reinvestment of such proceeds, in whatever form
the same may be, are herein referred to as "assets belonging to" that
class.
(c) The assets belonging to a class of the Corporation's
stock shall be charged with the liabilities of the Corporation with respect
to that class and with that class' share of the liabilities of the
Corporation not attributable to any particular class, in the latter case in
the proportion that the net asset value of that class (determined without
regard to such liabilities) bears to the net asset value of all classes of
the Corporation's stock (determined without regard to such liabilities) as
determined in accordance with Article NINTH of these Articles of
Incorporation. The determination of the Board of Directors shall be
conclusive as to the allocation of liabilities, including accrued expenses
and reserves, and assets to a particular class or classes.
(d) Each holder of stock of the Corporation, upon request
to the Corporation (accompanied by surrender of the appropriate stock
certificate or certificates in proper form for transfer, if any
certificates have been issued to represent such shares) shall be entitled
to require the Corporation to redeem, to the extent that the Corporation
may lawfully effect such redemption under the laws of the State of
Maryland, all or any part of the shares of stock standing in the name of
such holder on the books of the Corporation at a price per share equal to
the net asset value per share computed in accordance with Article NINTH
hereof.
(e) (i) The term "Minimum Amount" when used herein shall
mean One Thousand Dollars ($1,000) unless otherwise fixed by the Board
of Directors
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from time to time, provided that the Minimum Amount may not in
any event exceed Twenty-Five Thousand Dollars ($25,000). The
Board of Directors may establish differing Minimum Amounts for
each class of the Corporation's stock and for categories of
holders of shares of any class of stock based on such criteria
as the Board of Directors may deem appropriate.
(ii) If the net asset value of the shares of a class of the
Corporation's stock held by a stockholder shall be less than the
Minimum Amount then in effect with respect to shares of that class, or
with respect to the category of holders, in which the stockholder is
included, of shares of that class, the Corporation may redeem all of
those shares, upon notice given to the holder in accordance with
Paragraph (iv) of this Subsection (e), to the extent that the
Corporation may lawfully effect such redemption under the laws of the
State of Maryland.
(iii) The Corporation shall be entitled but not required to
redeem shares of stock from any stockholder or stockholders, to the
extent and at such times as the Board of Directors shall, in its
absolute discretion, determine to be necessary or advisable to prevent
the Corporation from qualifying as a "personal holding company",
within the meaning of the Internal Revenue Code of 1954, as amended
from time to time. Notice shall be given in accordance with Paragraph
(iv) of this Subsection (e).
(iv) The notice referred to in Paragraphs (ii) and (iii) of
this Subsection shall be in writing personally delivered or deposited
in the mail, at least thirty days (or such other number of days as may
be specified from time to time by the Board of Directors) prior to
such redemption. If mailed, the notice shall be addressed to the
stockholder at his post office address as shown on the books of the
Corporation, and sent by First Class mail, postage prepaid. The price
for shares acquired by the Corporation pursuant to this Subsection (e)
shall be an amount equal to the net asset value of such shares,
computed in accordance with Article NINTH hereof.
(f) Payment by the Corporation for shares of stock of
the Corporation surrendered to it for redemption shall be made by the
Corporation within seven business days of such surrender out of the funds
legally available therefor, provided that the Corporation may suspend the
right of the holders of stock of the Corporation to redeem shares of stock
and may postpone the right of such holders to receive payment for any
shares when permitted or required to do so by applicable statutes or
regulations. Payment of the aggregate price of shares surrendered for
redemption may be made in cash or, at the option of the Corporation, wholly
or partly in such portfolio securities of the Corporation as the
Corporation shall select.
(g) The right of any holder of stock of the Corporation
redeemed by the Corporation as provided in Subsections (d) or (e) of this
Section (3) to receive
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dividends thereon and all other rights of such holder with respect
to such shares shall terminate at the time as of which the purchase
or redemption price of such shares is determined, except the right
of such holder to receive (i) the redemption price of such shares
from the Corporation or its designated agent and (ii) any dividend
or distribution to which such holder has previously become entitled
as the record holder of such shares on the record date for such
dividend or distribution. If shares of stock are redeemed by the
Corporation pursuant to Subsection (e) of this Section (3) and
certificates representing the redeemed shares have been issued, the
redemption price need not be paid by the Corporation until the
certificates have been received by the Corporation or its agent
duly endorsed for transfer.
(h) The Corporation shall be entitled to purchase shares of
its stock, to the extent that the Corporation may lawfully effect such
purchase under the laws of the State of Maryland, upon such terms and
conditions and for such consideration as the Board of Directors shall deem
advisable, by agreement with the stockholder at a price not exceeding the
net asset value per share computed in accordance with Article NINTH hereof.
(i) The net asset value of each share of a class of
the Corporation's stock issued and sold or redeemed or purchased at net
asset value shall be the net asset value per share of the shares of that
class determined in accordance with Article NINTH hereof based on the
assets belonging to that class less the liabilities charged to that class.
(j) In the absence of any specification as to the
purpose for which shares of stock of the Corporation are redeemed or
purchased by it, all shares so redeemed or purchase shall be deemed to be
retired in the sense contemplated by the laws of the State of Maryland and
the number of the authorized shares of stock of the Corporation shall not
be reduced by the number of any shares redeemed or purchased by it. Until
their classification is changed in accordance with Section (2) of this
Article FIFTH, all shares so redeemed or purchased shall continue to belong
to the same class or series to which they belonged at the time of their
redemption or purchase.
(k) Shares of each class of stock shall be entitled to such
dividends or distributions, in stock or in cash or both, as may be declared
from time to time by the Board of Directors, acting in its sole discretion,
with respect to such class, provided that dividends or distributions shall
be paid on shares of a class of stock only out of lawfully available assets
belonging to that class.
(l) For the purpose of allowing the net asset value
per share of a class of the Corporation's stock to remain constant, the
Corporation shall be entitled to declare, pay and credit as dividends
daily the net income (which may include or give effect to realized and
unrealized gains and losses, as determined in accordance with the
Corporation's accounting and portfolio valuation policies) of the
Corporation allocated to that class. If the amount so determined for any
day is negative, the Corporation shall be entitled, without the payment of
monetary compensation but in consideration of the
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interest of the Corporation and its stockholders in
maintaining a constant net asset value per share of the class, to
redeem pro rata from all the stockholders of record of shares of
the class at the time of such redemption (in proportion to their
respective holdings thereof) such number of outstanding shares of
the class, or fractions thereof, as shall be required to permit the
net asset value per share of the class to remain constant.
(m) In the event of the liquidation or dissolution of the
Corporation, the stockholders of a class of the Corporation's stock shall
be entitled to receive, as a class, out of the assets of the Corporation
available for distribution to stockholders, the assets belonging to that
class. The assets so distributable to the stockholders of a class shall be
distributed among such stockholders in proportion to the number of shares
of that class held by them and recorded on the books of the Corporation.
In the event that there are any assets available for distribution that are
not attributable to any particular class of stock, such assets shall be
allocated to all classes in proportion to the net asset value of the
respective classes and then distributed to the holders of stock of each
class in proportion to the net asset value of the shares of that class held
by the respective holders.
(n) On each matter submitted to a vote of the shareholders,
each holder of a share of stock shall be entitled to one vote for each such
share standing in his name on the books of the Corporation irrespective of
the class thereof; provided, however, that to the extent class voting is
required by the Investment Company Act of 1940 or regulations thereunder,
as from time to time amended, or the laws of the State of Maryland as to
any such matter, those requirements shall apply.
(o) The Corporation may issue shares of stock in fractional
denominations to the same extent as its whole shares, an shares in
fractional denominations shall be shares of stock having proportionately to
the respective fractions represented thereby all the rights of whole
shares, including without limitation, the right to vote, the right to
receive dividends and distributions, and the right to participate upon
liquidation of the Corporation, but excluding the right to receive a stock
certificate representing fractional shares.
(4) No holder of any shares of stock of the Corporation shall be
entitled as of right to subscribe for, purchase, or otherwise acquire any such
shares which the Corporation shall issue or propose to issue; and any and all of
the shares of stock of the Corporation, whether now or hereafter authorized, may
be issued, or may be reissued or transferred if the same have been re-acquired
and have treasury status, by the Board of Directors to such persons, firms,
corporations and associations, and for such lawful consideration, and on such
terms, as the Board of Directors in its discretion may determine, without first
offering same, or any thereof, to any said holder.
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(5) All persons who shall acquire who shall acquire stock or
other securities of the Corporation shall acquire the same subject to the
provisions of these Articles of Incorporation, as from time to time amended.
SIXTH: The number of directors of the Corporation, until such number
shall be increased pursuant to the By-Laws of the Corporation, shall be one.
The number of directors shall never be less than the number prescribed by the
General Corporation Law of the State of Maryland and shall never be more than
twenty. The name of the person who shall act as director of the Corporation
until the first annual meeting or until his successor is duly chosen and
qualifies is William Berkowitz.
SEVENTH: The following provisions are inserted for the purpose of
defining, limiting and regulating the powers of the Corporation and of the Board
of Directors and stockholders.
(a) The business and affairs of the Corporation shall
be managed under the direction of the Board of Directors which shall have
and may exercise all powers of the Corporation except those powers which
are by law, by these Articles of Incorporation or by the By-Laws conferred
upon or reserved to the stockholders. In furtherance and not in limitation
of the powers conferred by law, the Board of Directors shall have power;
(i) to make, alter and repeal by-laws of the Corporation;
(ii) to issue and sell, from time to time, shares of any
class of the Corporation's stock in such amounts and on such terms and
conditions, and for such amount and kind of consideration, as the
Board of Directors shall determine;
(iii) from time to time to set apart out of any assets of
the Corporation otherwise available for dividends a reserve or
reserves for working capital or for any other proper purpose or
purposes, and to reduce, abolish or add to any such reserve or
reserves from time to time as said Board of Directors may deem to be
in the best interests of the Corporation; and to determine in its
discretion what part of the assets of the Corporation available for
dividends in excess of such reserve or reserves shall be declared in
dividends and paid to the stockholders of the Corporation; and
(iv) from time to time to determine to what extent and at
what times and places and under what conditions and regulations the
accounts, books and records of the Corporation, or any of them, shall
be open to the inspection of the stockholders; and no stockholder
shall have any right to inspect any account or book or document of the
Corporation, except as conferred by the laws of the State of Maryland,
unless and until authorized to do so by resolution of the Board of
Directors or of the stockholders of the Corporation.
(b) Notwithstanding any provision of the General
Corporation Law of the State of Maryland requiring a greater
proportion than a majority of the
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votes of all classes or of any class of the Corporation's stock
entitled to be cast in order to take or authorize any action, any
such action may be taken or authorized upon the concurrence of a
majority of the aggregate number of votes entitled to be cast
thereon subject to any applicable requirements of the Investment
Company Act of 1940, as from time to time in effect, or rules or
orders of the Securities and Exchange Commission or any successor
thereto.
(c) The presence in person or by proxy of the holders
of one-third of the shares of stock of the Corporation entitled to
vote (without regard to class) shall constitute a quorum at any
meeting of the stockholders, except with respect to any matter which,
under applicable statutes or regulatory requirements, requires
approval by a separate vote of one or more classes of stock, in which
case the presence in person or by proxy of the holders of one-third of
the shares of stock of each class required to vote as a class on the
matter shall constitute a quorum.
(d) Any determination made in good faith and, so far as
accounting matters are involved, in accordance with generally accepted
accounting principles by or pursuant to the direction of the Board of
Directors, as to the amount of the assets, debts, obligations, or
liabilities of the Corporation, as to the amount of any reserves or
charges set up and the proprietary thereof, as to the time of or
purpose for creating such reserves or charges, as to the use,
alteration or cancellation of any reserves or charges (whether or not
any debt, obligation or liability for which such reserves or charges
shall have been created shall have been paid or discharged or shall be
then or thereafter required to be paid or discharged), as to the value
of or the method of valuing any investment owned or held by the
Corporation, as to the market value or fair value of any investment or
fair value of any other asset of the Corporation, as to the allocation
of any asset of the Corporation to a particular class or classes of
the Corporation's stock, as to the charging of any liability of the
Corporation to a particular class or classes of the Corporation's
stock, as to the number of shares of the Corporation outstanding, as
to the number of shares of the Corporation outstanding, as to the
estimated expense to the Corporation in connection with purchases of
its shares, as to the ability to liquidate investments in orderly
fashion, or as to any other matters relating to the issue, sale,
purchase or other acquisition or disposition of investments or shares
of the Corporation, shall be final and conclusive and shall be binding
upon the Corporation and all holders of its shares, past, present and
future, and shares of the Corporation are issued and sold on the
condition and understanding that any and all such determinations shall
be binding as aforesaid.
(e) Except to the extent prohibited by the Investment
Company Act of 1940, as amended, or rules, regulations or orders
thereunder promulgated by the Securities and Exchange Commission or by
successor thereto or by the By-Laws of the Corporation, a director,
officer or employee of the Corporation shall not be disqualified by
his position from dealing or contracting with the
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Corporation, nor shall any transaction or contract of the
Corporation be void or voidable by reason of the fact that any
director, officer or employee or any firm of which any director,
officer or employee is a member or any corporation of which any
director, officer or employee is a stockholder, officer or
director, is in any way interested in such transaction or contract;
provided that in case a director or a firm or corporation of which
a director is a member, stockholder, officer or director, is so
interested, such fact shall be disclosed to or shall have been
known by the Board of Directors or a majority thereof; and any
director of the Corporation who is so interested, or who is a
member, stockholder, officer or director of such firm or
corporation, may be counted in determining the existence of a
quorum at any meeting of the Board of Directors of the Corporation
which shall authorize any such transaction or contract, with like
force and effect as if he were not such director, or member,
stockholder, officer or director of such firm or corporation.
(f) Specifically and without limitation of Subsection
(e) of this Article Seventh but subject to the exception therein
prescribed, the Corporation may enter into management or advisory,
underwriting, distribution and administration contracts and other
contracts, and may otherwise do business, with McConnell & Miller,
Inc. or with Reich & Tang, Inc. and any parent, subsidiary or
affiliate of any such affiliate, or the stockholders, directors,
officers and employees thereof, and may deal freely with one another
notwithstanding that the Board of Directors of the Corporation may be
composed in part of directors, officers or employees of either of such
firms and/or its parents, subsidiaries or affiliates and that officers
of the Corporation may have been, be or become directors, officers, or
employees of either of such firms and/or its parents, subsidiaries or
affiliates, and neither such management or advisory, underwriting,
distribution or administration contracts nor any other contract or
transaction between the Corporation and either of such firms and/or
its parents, subsidiaries or affiliates shall be invalidated or in any
way affected thereby, nor shall any director or officer of the
Corporation be liable to the Corporation or to any stockholder or
creditor thereof or to any person for any loss incurred by it or him
under or by reason of such contract or transaction; provided that
nothing herein shall protect any director or officer of the
Corporation against any liability to the Corporation or to its
security holders to which he would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of his office; and provided
always that such contract or transaction shall have been on terms that
were not unfair to the corporation at the time at which it was entered
into.
EIGHTH: To the maximum extent permitted by the General Corporation Law of
the State of Maryland as from time to time amended, the Corporation shall
indemnify its currently acting and its former directors and officers and those
persons who, at the request of the Corporation, serve or have served another
corporation, partnership, joint venture, trust or other enterprise in one or
more of such capacities.
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NINTH: For the purposes of the computation of net asset value referred to
in these Articles of Incorporation, the following rules shall apply:
(a) The net asset value of each share of a class of the
Corporation's stock issued or sold at its net asset value shall be the net
asset value per share of that class next determined, as provided in
Subsection (d) of this Article NINTH, following acceptance by the
Corporation of the purchase order, subscription or other agreement with
respect to the issue or sale of such share.
(b) The net asset value of each share of a class of the
Corporation's stock redeemed by the Corporation at the request of its
holder shall be the net asset value per share of that class next
determined, as provided in Subsection (d) of this Article NINTH, following
the time the Corporation receives a request for redemption of such share in
good order with all appropriate documentation, including stock
certificates, if any, duly endorsed for transfer.
(c) The net asset value of each share of a class of the
Corporation's stock purchased or redeemed by it otherwise than upon request
for redemption by the holder of the share shall be (i) the net asset value
per share of that class of the Corporation's stock next determined, as
provided in Subsection (d) of this Article NINTH, following the
Corporation's determination or agreement to purchase or redeem such share,
the expiration of any notice period and fulfillment of any other conditions
precedent to such purchase or redemption, or (ii) such lower price per
share as may be specified in the agreement, if any, with the stockholder
for the purchase or redemption of his shares.
(d) The net asset value of a share of a class of the
Corporation's stock as at the time of a particular determination shall be
the quotient obtained by dividing the value at such time of the net assets
of that class (i.e., the value of the assets belonging to that class less
the liabilities charged to that class exclusive of capital stock and
surplus) by the total number of shares of that class outstanding at such
time, all determined and computed as provided in the Corporation's By-Laws
or by or pursuant to the direction of the Board of Directors.
(e) The Corporation shall determine the net asset value per share
of a class of its stock on such days and at such times as may be determined
by the Board of Directors subject to any applicable rules and regulations
of the Securities and Exchange Commission or any successor thereto.
(f) The Corporation may suspend the determination of the net
asset value of a class of its stock during any period when it may suspend
the right of the holders of shares of that class to require the Corporation
to redeem their shares.
TENTH: The Corporation reserves the right to amend, alter, change or
repeal any provision contained in these Articles of Incorporation or in any
amendment hereto in the manner
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now or hereafter prescribed by the laws of the State of Maryland, including
any amendment which alters the contract rights, as expressly set forth in
these articles, of any outstanding stock, and all rights conferred upon
stockholders herein are granted subject to this reservation.
IN WITNESS WHEREOF, the undersigned, being the incorporator of the
Corporation, has adopted and signed these Articles of Incorporation for the
purpose of forming the corporation described herein pursuant to the General
Corporation Law of the State of Maryland and does hereby acknowledge that said
adoption and signing are his act.
/s/ Richard A. Bershtein
--------------------------------
Richard A. Bershtein
Dated: February 15, 1985
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EXHIBIT 2
<PAGE>
BY-LAWS
OF
SOUND SHORE FUND, INC.
-------------------------------
ARTICLE I
Offices
Section 1. PRINCIPAL OFFICE IN MARYLAND. The Corporation shall have a
principal office in the city of Baltimore, State of Maryland.
Section 2. OTHER OFFICES. The Corporation may have offices also at
such other places within and without the State of Maryland as the Board of
Directors may from time to time determine or as the business of the corporation
may require.
ARTICLE II
Meetings of Stockholders
Section 1. PLACE OF MEETING. Meetings of stockholders shall be held
at such place, either within the State of Maryland or at such other place within
the United States, as shall be fixed from time to time by the Board of
Directors.
Section 2. ANNUAL MEETINGS. Annual meetings of stockholders shall be
held on a date fixed from time to time by the Board of Directors not less than
ninety nor more than one hundred twenty days following the end of each fiscal
year of the Corporation, for the election of directors and the transaction of
any other business within the powers of the Corporation.
Section 3. NOTICE OF ANNUAL MEETING. Written or printed notice of the
annual meeting, stating the place, date and hour thereof, shall be given to each
stockholder entitled to vote thereat not less than ten nor more than ninety days
before the date of the meeting.
Section 4. SPECIAL MEETINGS. Special meetings of stockholders may be
called by the chairman, the president or by the Board of Directors and shall be
called by the secretary upon the written request of holders of shares entitled
to cast not less than twenty-five per cent of all the votes entitled to be cast
at such meeting. Such request shall state the purpose of purposes of such
meeting and the matters proposed to be acted on thereat. In the case of such
request for a special meeting, upon payment by such stockholders to the
Corporation of the estimated reasonable cost of preparing and mailing a notice
of such meeting, the secretary shall give the notice of such meeting. The
secretary shall not be required to call a special meeting to consider any matter
which is substantially the same as a matter acted upon at any special meeting of
stockholders held within the preceding twelve months unless requested to do so
by holders of shares entitled to cast not less than a majority of all votes
entitled to be cast at such meeting.
Section 5. NOTICE OF SPECIAL MEETING. Written or printed notice of a
special meeting of stockholders, stating the place, date, hour and purpose
thereof, shall be given by the secretary to each stockholder entitled to vote
thereat not less than ten nor more than ninety days before the date fixed for
the meeting.
Section 6. BUSINESS OF SPECIAL MEETINGS. Business transacted at any
special meeting of stockholders shall be limited to the purposes stated in the
notice thereof.
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Section 7. QUORUM. The holders of one-third of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business, except with respect to any matter which, under
applicable statutes or regulatory requirements, requires approval by a separate
vote of one or more classes of stock, in which case the presence in person or by
proxy of the holders of one-third of the shares of stock of each class required
to vote as a class on the matter shall constitute a quorum.
Section 8. VOTING. When a quorum is present at any meeting, the
affirmative vote of a majority of the votes cast, or, with respect to any matter
requiring a class vote, the affirmative vote of a majority of the votes cast of
each class entitled to vote as a class on the matter, shall decide any question
brought before such meeting (except that directors may be elected by the
affirmative vote of a plurality of the votes cast), unless the question is one
upon which by express provision of the Investment Company Act of 1940, as from
time to time in effect, or other statutes or rules or orders of the Securities
and Exchange Commission or any successor thereto or of the Articles of
Incorporation a different vote is required, in which case such express provision
shall govern and control the decision of such question.
Section 9. PROXIES. Each stockholder shall at every meeting of
stockholders by entitled to one vote in person or by proxy for each share of the
stock having voting power held by such stockholder, but no proxy shall be voted
after eleven months from its date, unless otherwise provided in the proxy.
Section 10. RECORD DATE. In order that the Corporation may determine
the stockholders entitled to notice of or to vote at any meeting of stockholders
or any adjournment thereof, to express consent to corporate action in writing
without a meeting, or to receive payment of any dividend or other distribution
or allotment of any rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of stock or for the purpose of any other lawful
action, the Board of Directors may fix, in advance, a record date which shall be
not more than ninety days and, in the case of a meeting of stockholders, not
less than ten days prior to the date on which the particular action requiring
such determination of stockholders is to be taken. In lieu of fixing a record
date, the Board of Directors may provide that the stock transfer books shall be
closed for a stated period, but not to exceed, in any case, twenty days. If the
stock transfer books are closed for the purpose of determining stockholders
entitled to notice of or to vote at a meeting of stockholders, such books shall
be closed for at least ten days immediately preceding such meeting. If no
record date is fixed and the stock transfer books are not closed for the
determination of stockholders: (1) The record date for the determination of
stockholders entitled to notice of, or to vote at, a meeting of stockholders
shall be at the close of business on the day on which notice of the meeting of
stockholders is mailed or the day thirty days before the meeting, whichever is
the closer date to the meeting; and (2) The record date for the determination of
stockholders entitled to receive payment of a dividend or an allotment of any
rights shall be at the close of business on the day on which the resolution of
the Board of Directors, declaring the dividend or allotment of rights, is
adopted, provided that the payment or allotment date shall not be more than
sixty days after the date of the adoption of such resolution.
Section 11. INSPECTORS OF ELECTION. The directors, in advance of any
meeting, may, but need not, appoint one or more inspectors to act at the meeting
or and adjournment thereof. If an inspector or inspectors are not appointed,
the person presiding at the meeting may, but need not, appoint one or more
inspectors. In case any person who may be appointed as an inspector fails to
appear or act, the vacancy may be filled by appointment made by the directors in
advance of the meeting or at the meeting by the person presiding thereat. Each
inspector, if any, before entering upon the discharge of his duties, shall take
and sign an oath faithfully to execute the duties of inspector at such meeting
with strict impartiality and according to the best of his ability. The
inspectors, if any, shall determine the number of shares outstanding and the
voting power of each, the shares represented at the meeting, the existence of a
quorum, the validity and effect of proxies, and shall receive votes, ballots or
consents, hear and determine all challenges and questions arising in connection
with the right to vote, count and tabulate all votes, ballots or consents,
determine the result, and do such acts as are proper to conduct the election or
vote with fairness to all stockholders. On request of the person presiding at
the meeting or any stockholder, the inspector or inspectors, if any, shall make
a report in writing of any challenge, question or matter determined by him or
them and execute a certificate of any fact found by him or them.
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Section 12. INFORMAL ACTION BY STOCKHOLDERS. Except to the extent
prohibited by the Investment Company Act of 1940, as from time to time in
effect, or rules or orders of the Securities and Exchange Commission or any
successor thereto, any action required or permitted to be taken without a
meeting if a consent in writing, setting forth such action, is signed by all the
stockholders entitled to vote on the subject matter thereof and any other
stockholders entitled to notice of a meeting of stockholders (but not to vote
thereat) have waived in writing any rights which they may have to dissent from
such action, and such consent and waiver are filed with the records of the
Corporation.
ARTICLE III
Board of Directors.
Section 1. NUMBER OF DIRECTORS. The number of directors constituting
the entire Board of Directors (which initially was fixed at one in the
Corporation's Articles of Incorporation) may be increased or decreased from time
to time by the vote of a majority of the entire Board of Directors within the
limits permitted by law but at no time may be more than twenty as provided in
the Articles of Incorporation, but the tenure of office of a director in office
at the time of any decrease in the number of directors shall not be affected as
a result thereof. The directors shall be elected to hold office at the annual
meeting of stockholders, except as provided in Section 2 of this Article, and
each director shall hold office until the next annual meeting of stockholders or
until his successor is elected and qualified. Any director may resign at any
time upon written notice to the Corporation. Any director may be removed,
either with or without cause, at any meeting of stockholders duly called and at
which a quorum is present by the affirmative vote of the majority of the votes
entitled to be cast thereon, and the vacancy in the Board of Directors caused by
such removal may be filled by the stockholders at the time of such removal.
Directors need not be stockholders.
Section 2. VACANCIES AND NEWLY-CREATED DIRECTORSHIPS. Any vacancy
occurring in the Board of Directors for any cause other than by reason of an
increase in the number of directors may be filled by a majority of the remaining
members of the Board of Directors although such majority is less than a quorum.
Any vacancy occurring by reason of an increase in the number of directors may be
filled by a majority of the directors then in office, though less than a quorum.
A director elected by the Board of Directors to fill a vacancy shall be elected
to hold office until the next annual meeting of stockholders or until his
successor is elected and qualifies.
Section 3. POWERS. The business and affairs of the Corporation shall
be managed under the direction of the Board of Directors which may exercise all
such powers of the Corporation and do all such lawful acts and things as are not
by statute or by the Articles of Incorporation or by these By-Laws conferred
upon or reserved to the stockholders.
Section 4. ANNUAL MEETING. The first meeting of each newly elected
Board of Directors shall be held immediately following the adjournment of the
annual meeting of stockholders and at the place thereof. No notice of such
meeting to the directors shall be necessary in order legally to constitute the
meeting, provided a quorum shall be present. In the event such meeting is not
so held, the meeting may be held at such time and place as shall be specified in
a notice given as hereinafter provided for special meetings of the Board of
Directors.
Section 5. OTHER MEETINGS. The Board of Directors of the Corporation
or any committee thereof may hold meetings, both regular and special, either
within or without the State of Maryland. Regular meetings of the Board of
Directors may be held without notice at such time and at such place as shall
from time to time be determined by the Board of Directors. Special meetings of
the Board of Directors may be called by the chairman, the president or by two or
more directors. Notice of special meetings of the Board of Directors shall be
given by the secretary to each director at least three days before the meeting
if by mail or at least 24 hours before the meeting if given in person or by
telephone or by telegraph. The notice need not specify the business to be
transacted.
Section 6. QUORUM AND VOTING. During such times when the Board of
Directors shall consist of more than one director, a quorum for the transaction
of business at meetings of the Board of Directors shall consist of two of the
directors in office at the time, but in no event shall a quorum consist of less
than one-third of the entire Board of Directors. the action of a majority of
the directors present at a meeting at which a quorum is present shall be the
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action of the Board of Directors. If a quorum shall not be present at any
meeting of the Board of Directors, the directors present thereat may adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present.
Section 7. COMMITTEES. The Board of Directors may appoint from among
its members an executive committee and other committees of the Board of
Directors, each committee to be composed of two or more of the directors of the
Corporation. The Board of Directors may, to the extent provided in the
resolution, delegate to such committees, in the intervals between meetings of
the Board of Directors, any or all of the powers of the Board of Directors in
the management of the business and affairs of the Corporation, except the power
to declare dividends, to issue stock , to recommend to stockholders any action
requiring stockholders' approval, to amend the by-laws or to approve any merger
or share exchange which does not require stockholders' approval. Such committee
or committees shall have the name of names as may be determined from time to
time by resolution adopted by the Board of Directors. Unless the Board of
Directors designates one or more directors as alternate members of any
committee, who may replace an absent or disqualified member at any meeting of
the committee, the members of any such committee present at any meeting and not
disqualified from voting may, whether or not they constitute a quorum,
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any absent or disqualified member of such committee. At
meetings of any such committee, a majority of the members or alternate members
of such committee shall constitute a quorum for the transaction of business and
the act of a majority of the members or alternate members present at any meeting
at which a quorum is present shall be the act of the committee.
Section 8. MINUTES OF COMMITTEE MEETINGS. The committees shall keep
regular minutes of their proceedings.
Section 9. INFORMAL ACTION BY BOARD OF DIRECTORS AND COMMITTEES. Any
action required or permitted to be taken at any meeting of the Board of
Directors or of any committee thereof may be taken without a meeting if a
written consent thereto is signed by all members of the Board of Directors or of
such committee, as the case may be, and such written consent is filed with the
minutes of proceedings of the Board of Directors or committee.
Section 10. MEETINGS BY CONFERENCE TELEPHONE. The members of the Board
of Directors or any committee thereof may participate in a meeting of the Board
of Directors or committee by means of a conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other at the same time and such participation shall
constitute presence in person at such meeting.
Section 11. FEES AND EXPENSES. The directors may be paid their
expenses of attendance at each meeting of the Board of Directors and may be paid
a fixed sum for attendance at each meeting of the Board of Directors or a stated
salary as director. No such payment shall preclude any director from serving
the Corporation in any other capacity and receiving compensation therefor.
Members of special or standing committees may be allowed like reimbursement and
compensation for attending committee meetings.
ARTICLE IV
Notices
Section 1. GENERAL. Notices to directors and stockholders mailed to
them at their post office addresses appearing on the books of the Corporation
shall be deemed to be given at the time when deposited in the United States
mail.
Section 2. WAIVER OF NOTICE. Whenever any notice is required to be
given under the provisions of the statutes, of the Articles of Incorporation or
of these by-laws, a waiver thereof in writing, signed by the person or persons
entitled to said notice, whether before or after the time stated therein, shall
be deemed the equivalent of notice. Attendance of a person at a meeting shall
constitute a waiver of notice of such meeting except when the person attends a
meeting for the express purpose of objecting, at the beginning of the meeting,
to the transaction of any business because the meeting is not lawfully called or
convened.
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ARTICLE V
Officers
Section 1. GENERAL. The officers of the Corporation shall be chosen by
the Board of Directors at its first meeting after each annual meeting of
stockholders and shall be a chairman of the Board of Directors, a president, a
secretary and a treasurer. The Board of Directors may choose also such vice
presidents and additional officers or assistant officers as it may deem
advisable. Any number of offices, except the offices of president and vice
president, may be held by the same person. No officer shall execute,
acknowledge or verify any instrument in more than one capacity if such
instrument is required by law to be executed, acknowledged or verified by two or
more officers.
Section 2. OTHER OFFICERS AND AGENTS. The Board of Directors may
appoint such other officers and agents as it desires who shall hold their
offices for such terms and shall exercise such powers and perform such duties as
shall be determined from time to time by the Board of Directors.
Section 3. TENURE OF OFFICERS. The officers of the Corporation shall
hold office at the pleasure of the Board of Directors. Each officer shall hold
his office until his successor is elected and qualifies or until his earlier
resignation or removal. Any officer may resign at any time upon written notice
to the Corporation. Any officer elected or appointed by the Board of Directors
may be removed at any time by the Board of Directors when, in its judgment, the
best interests of the Corporation will be served thereby. Any vacancy occurring
in any office of the Corporation by death, resignation, removal or otherwise
shall be filled by the Board of Directors.
Section 4. CHAIRMAN OF THE BOARD OF DIRECTORS. The chairman of the
Board of Directors shall preside at all meetings of the stockholders and of the
Board of Directors. He shall execute on behalf of the Corporation, and may
affix the seal or cause the seal to be affixed to, all instruments requiring
such execution except to the extent that signing and execution thereof shall be
expressly delegated by the Board of Directors to some other officer or agent of
the Corporation.
Section 5. PRESIDENT. The president shall, in the absence of the
chairman of the Board of Directors, preside at all meetings of the stockholders
or of the Board of Directors. He shall be the chief executive officer and shall
have general and active management of the business of the Corporation and shall
see that all orders and resolutions of the Board of Directors are carried into
effect. He shall be ex officio a member of all committees designated by the
Board of Directors. He shall execute bonds, mortgages and other contracts
requiring a seal, under the seal of the Corporation, except where required or
permitted by law to be otherwise signed and executed and except where the
signing and execution thereof shall be expressly delegated by the Board of
Directors to some other officer or agent of the Corporation.
Section 6. VICE PRESIDENT. The vice presidents shall act under the
direction of the president and in the absence or disability of the president
shall perform the duties and exercise the powers of the president. They shall
perform such other duties and have such other powers as the president or the
Board of Directors may from time to time prescribe. The Board of Directors may
designate one or more executive vice presidents or may otherwise specify the
order of seniority of the vice presidents and, in that event, the duties and
powers of the president shall descend to the vice presidents in the specified
order of seniority.
Section 7. SECRETARY. The secretary shall act under the direction of
the president. Subject to the direction of the president he shall attend all
meetings of the Board of Directors and all meetings of stockholders and record
the proceedings in a book to be kept for that purpose and shall perform like
duties for the committees designated by the Board of Directors when required.
He shall give, or cause to be given, notice of all meetings of stockholders and
special meetings of the Board of Directors, and shall perform such other duties
as may be prescribed by the president or the Board of Directors. He shall keep
in safe custody the seal of the Corporation and shall affix the seal or cause it
to be affixed to any instrument requiring it.
Section 8. ASSISTANT SECRETARIES. The assistant secretaries in the
order of their seniority, unless otherwise determined by the president or the
Board of Directors, shall, in the absence or disability of the secretary,
perform the
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duties and exercise the powers of the secretary. They shall perform such other
duties and have such other powers as the president or the Board of Directors may
from time to time prescribe.
Section 9. TREASURER. The treasurer shall act under the direction of
the president. Subject to the direction of the president he shall have the
custody of the corporate funds and securities and shall keep full and accurate
accounts of receipts and disbursements in books belonging to the Corporation and
shall deposit all moneys and other valuable effects in the name and to the
credit of the Corporation in such depositories as may be designated by the Board
of Directors. He shall disburse the funds of the Corporation as may be ordered
by the president or the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the president and the Board of Directors, at
its regular meetings, or when the Board of Directors so requires, an account of
all his transactions as treasurer and of the financial condition of the
Corporation.
Section 10. ASSISTANT TREASURERS. The assistant treasurers in the
order of their seniority, unless otherwise determined by the president or the
Board of Directors, shall, in the absence or disability of the treasurer,
perform the duties and exercise the powers of the treasurer. They shall perform
such other duties and have such other powers as the president or the Board of
Directors may from time to time prescribe.
ARTICLE VI
Certificates of Stock
Section 1. GENERAL. Every holder of stock of the Corporation who has
made full payment of the consideration for such stock shall be entitled upon
request to have a certificate, signed by, or in the name of the Corporation by,
the president or a vice president and countersigned by the treasurer or an
assistant treasurer or the secretary or an assistant secretary of the
Corporation, certifying the number and class of whole shares of stock owned by
him in the Corporation.
Section 2. FRACTIONAL SHARE INTERESTS. The Corporation may issue
fractions of a share of stock. Fractional shares of stock shall have
proportionately to the respective fractions represented thereby all the rights
of whole shares, including the right to vote, the right to receive dividends and
distributions and the right to participate upon liquidation of the Corporation,
excluding, however, the right to receive a stock certificate representing such
fractional shares.
Section 3. SIGNATURES ON CERTIFICATES. Any of or all the signatures on
a certificate may be a facsimile. In case any officer who has signed or whose
facsimile signature has been placed upon a certificate shall cease to be such
officer before such certificate is issued, it may be issued with the same effect
as if he were such officer at the date of issue. The seal of the Corporation or
a facsimile thereof may, but need not, be affixed to certificates of stock.
Section 4. LOST, STOLEN OR DESTROYED CERTIFICATES. The Board of
Directors may direct a new certificate or certificates to be issued in place of
any certificate or certificates theretofore issued by the Corporation alleged to
have been lost, stolen or destroyed, upon the making of any affidavit of that
fact by the person claiming the certificate or certificates to be lost, stolen
or destroyed. When authorizing such issue of a new certificate or certificates,
the Board of Directors may, in its discretion and as a condition precedent to
the issuance thereof, require the owner of such lost, stolen or destroyed
certificate or certificates, or his legal representative, to give the
Corporation a bond in such sum as it may direct as indemnity against any claim
that may be made against the Corporation with respect to the certificate or
certificates alleged to have been lost, stolen or destroyed.
SECTION 5. Transfer of Shares. Upon request by the registered owner of
shares, and if a certificate has been issued to represent such shares upon
surrender to the Corporation or a transfer agent of the Corporation of a
certificate for shares of stock duly endorsed or accompanied by proper evidence
of succession, assignment or authority to transfer, subject to the Corporation's
rights to redeem or purchase such shares, it shall be the duty of the
Corporation, if it is satisfied that all provisions of the Articles of
Incorporation, of the by-laws and of the law regarding the transfer of shares
have been duly complied with, to record the transaction upon its books, issue a
new certificate to the person entitled thereto upon request for such
certificate, and cancel the old certificate, if any.
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Section 6. REGISTERED OWNERS. The Corporation shall be entitled to
recognize the person registered on its books as the owner of shares to be the
exclusive owner for all purposes including redemption, voting and dividends, and
the Corporation shall not be bound to recognize any equitable or other claim to
or interest in such share or shares on the part of any other person, whether or
not it shall have express or other notice thereof, except as otherwise provided
by the laws of Maryland.
ARTICLE VII
Net Asset Value
The net asset value of a share of Common Stock of the Corporation as at
the time of a particular determination shall be the quotient obtained by
dividing the value at such time of the net assets of the Corporation (i.e., the
value of the assets of the Corporation less its liabilities exclusive of capital
and surplus) by the total number of shares of Common Stock outstanding at such
time, all determined and computed as follows:
(1) The assets of the Corporation shall be deemed to include (A) all
cash on hand, on deposit, or on call, (B) all bills and notes and
accounts receivable, (C) all securities owned or contracted for by the
Corporation, other than shares of its own Common Stock, (D) all interest
accrued on any interest bearing securities owned by the Corporation and
(E) all other property of every kind and nature including prepaid
expenses. Portfolio securities for which market quotations are readily
available shall be valued at market value. All other investment assets
of the Corporation, including restricted securities, shall be valued in
such manner as the Board of Directors of the Corporation in good faith
shall deem appropriate to reflect such securities' fair value.
(2) The liabilities of the Corporation shall include (A) all bills and
notes and accounts payable, (B) all administrative expenses payable
and/or accrued (including management and advisory fees payable and/or
accrued, including in the case of any contingent feature thereof, an
estimate based on the facts existing at the time), (C) all contractual
obligations for the payment of money or property, including the amount
of any unpaid dividend declared upon the Corporation's Common Stock, (D)
all reserves, if any, authorized or approved by the Board of Directors
for taxes, including reserves for taxes at current rates based on any
unrealized appreciation in the value of the assets of the Corporation
and (E) all other liabilities of the Corporation of whatsoever kind and
nature except liabilities represented by outstanding capital stock and
surplus of the Corporation.
(3) For the purposes thereof
(A) Common Stock subscribed for shall not be deemed to be
outstanding until immediately after the time as of which its net
asset value is determined as provided in the Articles of
Incorporation next following the acceptance of the subscription
therefor and the subscription price thereof shall not be deemed
to be an asset of the Corporation until after such time, but
immediately thereafter such capital stock shall be deemed to be
outstanding and until paid the subscription price thereof shall
be deemed to be an asset of the Corporation.
(B) Common Stock surrendered for redemption by the Corporation
pursuant to the provisions of the Articles of Incorporation or
purchased by the Corporation pursuant to the provisions of the
Articles of Incorporation or these by-laws shall be deemed to
be outstanding to and including the time as of which its net
asset value is determined as provided in the Articles of
Incorporation but not thereafter, and thereupon and until paid
the redemption or purchase price thereof shall be deemed to be a
liability of the Corporation.
(C) Changes in the holdings of the Corporation's portfolio
securities shall be accounted for on a trade date basis.
(D) Expenses, including management and advisory fees, shall be
included to date of calculation.
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In addition to the foregoing, the Board of Directors is empowered, subject to
applicable legal requirements, in its absolute discretion, to establish other
methods for determining the net asset value of each share of Common Stock of the
Corporation.
ARTICLE VIII
Miscellaneous
Section 1. RESERVES. There may be set aside out of any funds of the
Corporation available for dividends such sum or sums as the Board of Directors
from time to time, in their absolute discretion, think proper as a reserve or
reserves to meet contingencies, or for such other purpose as the Board of
Directors shall think conducive to the interest of the Corporation, and the
Board of Directors may modify or abolish any such reserve.
Section 2. DIVIDENDS. Dividends upon the stock of the Corporation may,
subject to the provisions of the Articles of Incorporation and of the provisions
of applicable law, be declared by the Board of Directors at any time. Dividends
may be paid in cash, in property or in shares of the Corporation's stock,
subject to the provisions of the Articles of Incorporation and of applicable
law.
Section 3. CAPITAL GAINS DISTRIBUTIONS. The amount and number of
capital gains distributions paid to the stockholders during each fiscal year
shall be determined by the Board of Directors. Each such payment shall be
accompanied by a statement as to the source of such payment, to the extent
required by law.
Section 4. CHECKS. All checks or demands for money and notes of the
Corporation shall be signed by such officer or officers or such other person or
persons as the Board of Directors may from time to time designate.
Section 5. FISCAL YEAR. The fiscal year of the Corporation shall be
fixed by resolution of the Board of Directors.
Section 6. SEAL. The corporate seal shall have inscribed thereon the
name of the Corporation, the year of its organization and the words "Corporate
Seal, Maryland". The seal may be used by causing it or a facsimile thereof to
be impressed or affixed or in another manner reproduced.
ARTICLE IX
Amendments
The Board of Directors shall have the power to make, alter and repeal
by-laws of the Corporation.
<PAGE>
EXHIBIT 4
<PAGE>
Number Incorporated under the Laws of the State of Maryland Shares
SOUND SHORE FUND, INC.
COMMON STOCK SEE REVERSE SIDE
FOR CERTAIN DEFINITIONS
CUSIP _________________
THIS IS TO CERTIFY THAT
IS THE OWNER OF
FULLY PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK, PAR
VALUE $.001 PER SHARE OF
-------------- --------------
- ------------------------- SOUND SHORE FUND, INC. ---------------------
-------------- --------------
(herein called the "Corporation") transferable on the books of the
Corporation in person or by attorney duly authorized in writing upon
surrender of this certificate properly endorsed. The holder hereof by
accepting this certificate expressly assents to and is bound by the Articles
of Incorporation, as amended, and the By-Laws, as amended, of the
Corporation, copies of which are available for inspection at the principal
office of the Corporation in the State of Maryland.
THE SHARES REPRESENTED BY THIS CERTIFICATE WILL BE REDEEMED BY THE
CORPORATION UPON REQUEST OF THE STOCKHOLDER AS PROVIDED IN THE ARTICLES OF
INCORPORATION OF THE CORPORATION. IN ADDITION, THE ARTICLES OF INCORPORATION
PROVIDE THAT THE CORPORATION, AT ITS OPTION, MAY REDEEM SHARES OF ITS STOCK
UNDER CERTAIN OTHER CIRCUMSTANCES. THE CORPORATION WILL FURNISH TO ANY
STOCKHOLDER UPON REQUEST AND WITHOUT CHARGE A FULL STATEMENT OF THE
DESIGNATIONS, AND ANY PREFERENCES, CONVERSION AND OTHER RIGHTS, VOTING
POWERS, RESTRICTIONS, LIMITATIONS AS TO DIVIDENDS, QUALIFICATIONS AND TERMS
AND CONDITIONS OF REDEMPTION OF THE STOCK OF EACH CLASS TO THE EXTENT THEY
HAVE BEEN SET, AND THE AUTHORITY OF THE BOARD OF DIRECTORS TO CLASSIFY
UNISSUED SHARES AND TO SET THE RELATIVE RIGHTS AND PREFERENCES THEREOF AND OF
ANY SUBSEQUENT SERIES OF ANY SUCH CLASSES OR SERIES.
This Certificate is not valid unless countersigned by the Transfer Agent.
WITNESS the facsimile seal of the Corporation and the facsimile
signatures of its duly authorized officers.
ated: SEAL
1985
/s/ Shanna S. Sullivan /s/ T. Gibb Kane, Jr.
SECRETARY Delaware PRESIDENT
<PAGE>
The following abbreviations, when used in the inscription on the face of this
certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by entireties
JT TEN - as joint tenants with right of survivorship and not as tenants in
common
UNIF GIFT MIN ACT - _______________Custodian _____________under Uniform Gifts to
(Cust) (Minor)
Minors Act _________________
(State)
Additional abbreviations may also be used through not in the above list.
FOR VALUE RECEIVED, ______________________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY NUMBER
OR OTHER IDENTIFYING NUMBER OF ASSIGNEE
________________________________________
________________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE)
________________________________________________________________________________
_______________________________________________________________________, SHARES
OF THE COMMON STOCK REPRESENTED BY THE WITHIN CERTIFICATE, AND DO HEREBY
IRREVOCABLY CONSTITUTE AND APPOINT
______________________________________________________________________ ATTORNEY
TO TRANSFER THE SAID STOCK ON THE BOOKS OF THE WITHIN-NAMED CORPORATION WITH
FULL POWER OF SUBSTITUTION IN THE PREMISES.
DATED ________________ 19 ____
___________________________________________________
NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the certificate, in every particular, without
alteration or enlargement, or any change whatever.
<PAGE>
EXHIBIT 5
<PAGE>
SOUND SHORE FUND, INC.
INVESTMENT ADVISORY AGREEMENT
May 3, 1985
Restated March 14, 1995
AGREEMENT, made the 3rd day of May, 1985, between Sound Shore Fund, Inc.
(the "Fund"), a corporation organized under the laws of the State of Maryland
with its principal place of business at 61 Broadway, Suite 2770, New York, New
York 10006 and Sound Shore Management, Inc., (the "Adviser"), a corporation
organized under the laws of the State of Delaware, formerly known as McConnell &
Miller, Inc. and having its principal place of business at 8 Sound Shore Drive,
Greenwich, Connecticut 06836.
WHEREAS, the Fund is registered under the Investment Company Act of 1940,
as amended (the "Act") as an open-end management investment company and is
authorized to issue its shares of capital stock, par value $.001 per share, in
separate series and classes;
WHEREAS, the Fund proposes to engage in the business of investing and
reinvesting its assets in securities of the type and in accordance with the
limitations specified in its Articles of Incorporation, By-Laws and Registration
Statement filed with the Securities and Exchange Commission under the Act and
the Securities Act of 1933 ("Registration Statement"), including any
representations made in the prospectus and statement of additional information,
all in such manner and to such extent as may from time to time be authorized by
its Board of Directors; and
WHEREAS, the Fund desires that the Adviser manage the investment and
reinvestment of its assets in accordance with the above and with the following
provisions of this Agreement;
NOW THEREFORE, the Fund and the Adviser agree as follows:
1. The Fund has provided the Adviser with copies of the Fund's Articles
of Incorporation, By-Laws and Registration Statement and in the future will
furnish the Adviser with any amendments thereof.
2. Without limiting the generality of the foregoing, the Adviser agrees
to provide the management and related services specified below:
(a) The Adviser will make decisions with respect to all purchases and
sales of the portfolio securities and other investment assets. To carry out
such decisions, the Adviser is hereby authorized, as the Fund's agent and
attorney in fact, for the Fund's account and at the Fund's risk and in the
Fund's name, to place orders for the investment and reinvestment of the Fund's
investment assets. In all purchases, sales and other transactions in the Fund's
investment assets the Adviser is authorized to exercise full discretion and act
for the Fund in the same manner and with the same force and effect as the Fund
itself could do with respect to such purchases, sales, or other transactions, as
well as with respect to all other things necessary or incidental to the
furtherance or conduct of such purchases, sales or other transactions. In
making such purchases, sales and other transactions, the Adviser will bear in
mind the Fund's policies set from time to time by the Fund's Board of Directors
as well as the limitations imposed by the Articles of Incorporation and
Registration Statement and the limitations in the Act and in the Internal
Revenue Code of 1986 in respect of regulated investment companies.
(b) The Adviser will report to the Board of Directors at each meeting
thereof all changes in the portfolio since the prior report, and will also keep
the Fund in touch with important developments affecting the portfolio and on the
Adviser's own initiative will furnish the Fund from time to time with such
information as the Adviser may believe appropriate for this purpose, whether
concerning the individual companies whose securities are included in the
portfolio, the industries in which they engage, or the economy generally. The
Adviser will also furnish the Fund with such statistical and analytical
information with respect to the portfolio positions as the Adviser may believe
appropriate or as the Fund reasonably may request.
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(c) It is understood that the Adviser will from time to time employ
or associate with itself such persons as it believes to be particularly fitted
to assist the Adviser in the execution of its duties hereunder, the cost of
performance of such duties to be borne and paid by the Adviser. No obligations
may be incurred on the Fund's behalf in any such respect. During the
continuance of this agreement, the Adviser will provide to the Fund persons
satisfactory to the Fund's Board of Directors to serve as officers and employees
of the Fund. These shall include a President and such additional officers and
employees as the Fund may reasonably request. Nothing contained herein shall be
construed to restrict the Fund's right to hire its own employees or to contract
for services to be performed by third parties.
3. It is further agreed that, if in any fiscal year (or portion thereof
that this agreement is in effect between the Adviser and the Fund) the Fund's
aggregate expenses (including fees paid pursuant to this agreement and the
administrative services contract between Forum Financial Services, Inc. or any
successor administrator ("Forum"), and the Fund and the amortization of the
Fund's organizational expenses but excluding interest, taxes, brokerage
commissions, and extraordinary expenses) exceed the limits prescribed by any
state in which the Fund's shares are qualified for sale, the Adviser will
reimburse the Fund for that portion of such excess which bears the same relation
to the total of such excess as the Adviser's fee hereunder bears to the total
fees paid for the fiscal year pursuant to this agreement and the administrative
services contract between the Fund and Forum (reduced pro rata for any portion
of less than one year). It is further agreed that, subject to the foregoing,
the Fund shall be responsible and hereby assumes the obligation for payment of
all the Fund's other expenses, including: (a) payment of the fees payable to
the Adviser under paragraph 5 hereof and payable to Forum pursuant to the
administrative services contract between the Fund and Forum, (b) the Fund's
organizational expenses, (c) brokerage fees and commissions, (d) taxes,
(e) interest charges on borrowings, (f) the cost of any liability insurance or
fidelity bonds, (g) legal and auditing fees and expenses, (h) the fees and
certain expenses of the Fund's Custodian and Transfer and Dividend Disbursing
Agent, (i) the fees of any trade association of which the Fund is a member,
(j) the expenses of printing and mailing reports and notices to the Fund's
shareholders, (k) filing fees for the registration or qualification of the
Fund's shares of common stock under federal or state securities laws, (l) the
fees and expenses involved in registering and maintaining the Fund's
registration and the registration of the Fund's shares of common stock with the
Securities and Exchange commission, (m) the costs of the Fund's registration as
a broker or dealer, (n) the costs of qualifying the Fund's shares of common
stock under state securities laws, (o) the expenses of servicing shareholders
and shareholder accounts, and (p) any extraordinary expenses incurred by the
Fund.
4. The Adviser will give the Fund the benefit of the Adviser's best
judgment and efforts in rendering these services to the Fund, and the Fund
agrees as an inducement to the Adviser's undertaking these services that the
Adviser shall not be liable hereunder for any mistake of judgment or in any
event whatsoever, except for lack of good faith, provided that nothing herein
shall be deemed to protect, or purport to protect, the Adviser against any
liability to the Fund or to the Fund's security holders to which the Adviser
would otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of the Adviser's duties hereunder, or by reason of
the Adviser's reckless disregard of the Adviser's obligations and duties
hereunder.
5. In consideration of the foregoing, the Fund will pay the Adviser a fee
at the annual rate of .75 of one percent of the Fund's average daily net assets.
Such fee shall be accrued by the Fund daily and shall be payable in arrears on
the last day of each calendar month for services performed hereunder during such
month. The Adviser's reimbursement, if any, of the Fund's expenses, as provided
in paragraph 3 hereof, shall be estimated and paid to the Fund monthly in
arrears, at the same time as the Fund's payment to the Adviser for such month.
6. For so long as such payments are authorized by an effective
distribution plan adopted by the Fund in accordance with the provisions of Rule
12b-1 under the Act, the Adviser may make payments from time to time from the
Adviser's own resources, which may include the fees payable to the Adviser under
paragraph 5 hereof, management and advisory fees received from other investment
companies and past profits, in order to (i) defray the costs of, and to
compensate others, including organizations whose customers or clients are the
Fund's shareholders ("Participating Intermediaries"), for performing shareholder
servicing and related administrative and accounting functions on the Fund's
behalf; (ii) compensate Participating Intermediaries for providing assistance in
distributing the Fund's shares; and (iii) defray the cost of the preparation and
printing of brochures and other promotional
2
<PAGE>
materials, mailings to prospective shareholders, advertising, sales
personnel, and other activities in connection with the distribution of the
Fund's shares. The amount of any payments made hereunder will be such amount
as the Adviser shall determine in the Adviser's sole discretion; provided,
however, that no such payment will increase the amount which the Fund is
required to pay the Adviser under this agreement or otherwise. All written
agreements relating to such payments entered into by the Adviser and any
Participating Intermediary shall be in a form satisfactory to the Fund's
Board of Directors. The Adviser will prepare and furnish to the Fund's Board
of Directors, at least quarterly, written reports setting forth all amounts
expended for distribution purposes hereunder and identifying the distribution
activities for which such expenditures were made.
7. This agreement shall become effective on the date hereof and shall
remain in effect until the first meeting of shareholders, annual or special,
held after such date, and, if approved by the majority vote of holders of the
Fund's outstanding voting securities (as defined in the Act) at such meeting,
shall remain in effect during the period ending two years from the date hereof
and shall continue in effect thereafter, provided that such continuance is
specifically approved at least annually by the Fund's Board of Directors or by
majority vote of the holders of the Fund's outstanding voting securities (as
defined in the Act), and, in either case, by a majority of the Fund's directors
who are not parties to this agreement or interested persons, as defined in the
Act, of any such party. Upon the effectiveness of this agreement, it shall
supersede all previous agreements between the Adviser and the Fund covering the
subject matter hereof. This agreement may be terminated at any time, without
the payment of any penalty, by vote of a majority of the Fund's outstanding
voting securities (as so defined), by vote of a majority of the Fund's entire
Board of Directors on sixty days' written notice to the Adviser, or by the
Adviser on sixty days' written notice to the Fund.
8. This agreement may not be transferred, assigned, sold or in any manner
hypothecated or pledged by the Adviser and this agreement shall terminate
automatically in the event of any such transfer, assignment, sale, hypothecation
or pledge by the Adviser. The term "transfer," "assignment" and "sale" as used
in this paragraph shall have the meanings ascribed thereto by governing law and
any interpretation thereof contained in rules or regulations promulgated by the
Securities and Exchange Commission thereunder.
9. Except to the extent necessary to perform the Adviser's obligations
hereunder, nothing herein shall be deemed to limit or restrict the Adviser's
right, or the right of any of the Adviser's officers, directors or employees who
may also be a director, officer or employee of the Fund, or persons otherwise
affiliated with the Fund (within the meaning of the Act) to engage in any other
business or to devote time and attention to the management or other aspects of
any other business, whether of a similar or dissimilar nature, or to render
service of any kind to any other corporation, firm, individual or association.
IN WITNESS THEREOF, the parties to this Agreement, the Fund and the
Adviser, caused this agreement to be duly executed on May 3, 1985, and hereby
cause it to be restated as of March 14, 1995.
SOUND SHORE FUND, INC.
By: /s/ T. Gibbs Kane, Jr.
-----------------------------
T. Gibbs Kane, Jr., President
SOUND SHORE MANAGEMENT, INC.
By: /s/ Harry Burn, III
-----------------------------
Harry Burn III, Vice President
3
<PAGE>
EXHIBIT 6
<PAGE>
SOUND SHORE FUND, INC.
DISTRIBUTION AGREEMENT
AGREEMENT made this 8th day of June, 1993, between Sound Shore Fund, Inc.
("Sound Shore"), a corporation organized under the laws of the State of Maryland
with its principal place of business at 61 Broadway, New York, New York 10006,
and Forum Financial Services, Inc. (the "Distributor"), a corporation organized
under the laws of State of Delaware with its principal place of business at 61
Broadway, New York, New York 10006.
WHEREAS, Sound Shore is registered under the Investment Company Act of
1940, as amended (the "Act") as an open-end management investment company and
issues shares of common stock, par value $0.001, (the "Shares"); and
WHEREAS, Sound Shore desires that the Distributor, as principal
underwriter, offer the Shares of Sound Shore and Distributor is willing to act
as principal underwriter on the terms and conditions set forth in this
Agreement;
NOW THEREFORE, Sound Shore and Distributor agree as follows:
SECTION 1. APPOINTMENT
Sound Shore hereby appoints Distributor, and Distributor hereby agrees, to
act as distributor of the Shares for the period and on the terms set forth in
this Agreement. In connection therewith, Sound Shore has delivered to the
Distributor copies of its Articles of Incorporation and Bylaws, Registration
Statement and all amendments thereto filed pursuant to the Securities Act of
1933, as amended (the "Securities Act") or the Act (the "Registration
Statement") and the current Prospectus and Statement of Additional Information
of Sound Shore (collectively, as currently in effect and as amended or
supplemented, the "Prospectus") and, shall promptly furnish the Distributor with
all amendments of or supplements to the foregoing.
SECTION 2. DISTRIBUTION SERVICES
Subject to the direction and control of Sound Shore's Board of Directors
(the "Board"), the Distributor shall serve as distributor of the Shares.
(a) As agent of and sole distributor for Sound Shore, Distributor shall
offer, and solicit offers to subscribe to, the unsold balance of Shares as shall
then be effectively registered under the Securities Act and applicable state
securities laws. All subscriptions for Shares obtained by Distributor shall be
directed to Sound Shore for acceptance and shall not be binding
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<PAGE>
on Sound Shore until accepted by it. Distributor shall have no
authority to make binding subscriptions on behalf of Sound Shore. Sound
Shore reserves the right to sell Shares directly to investors through
subscriptions received by Sound Shore. Distributor's rights hereunder shall
not apply to Shares issued in connection with (a) the merger or consolidation
of Sound Shore or, if applicable, its separate series or classes with any
other investment company or series or class thereof, (b) Sound Shore's
acquisition by purchase or otherwise of all or substantially all of the
assets or stock of any other investment company, or (c) the reinvestment in
Shares by Sound Shore's shareholders of dividends or other distributions or
any other offering by Sound Shore of securities to its shareholders.
(b) Distributor shall use its best efforts to obtain subscriptions to
Shares upon the terms and conditions contained herein and in the Prospectus,
including the offering price. Distributor shall send to Sound Shore promptly
all subscriptions placed with Distributor. Sound Shore shall advise Distributor
in its capacity as distributor of the approximate net asset value per Share at
any time requested by Distributor which is a net asset value determination time
as disclosed in the Prospectus and at such other times as it shall have been
determined. Sound Shore shall furnish Distributor from time to time, for use in
connection with the offering of Shares, such other information with respect to
Sound Shore and Shares as Distributor may reasonably request. Sound Shore shall
supply Distributor with such copies of the Prospectus as Distributor may
request. Distributor may use its employees, agents and other persons who need
not be its employees, at its cost and expense, to assist it in carrying out its
obligations hereunder, but no such employee, agent or other person shall be
deemed to be an agent of Sound Shore or have any rights under this Agreement.
(c) Sound Shore reserves the right to suspend the offering of Shares at
any time, in the absolute discretion of the Board, and upon notice of such
suspension Distributor shall cease to offer shares of Stock.
(d) Sound Shore and Distributor will cooperate with each other in taking
such action as may be necessary to qualify Shares for sale under the securities
laws of such states as Sound Shore may designate, provided, that Distributor
shall not be required to register as a broker-dealer or file a consent to
service of process in any such state. Sound Shore shall pay all fees and
expenses of registering Shares under the Securities Act and of registering or
qualifying Shares and Sound Shore's qualification under applicable state
securities laws. Distributor shall pay all expenses relating to its broker-
dealer qualification.
(e) Sound Shore represents that its Registration Statement and Prospectus
under the Securities Act have been or will be, as the case may be, carefully
prepared in conformity with the
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requirements of the Securities Act and the rules and regulations of the
Securities and Exchange Commission (the "Commission") thereunder. Sound
Shore represents and warrants that its Registration Statement and Prospectus
contain or will contain all statements required to be stated therein in
accordance with the Securities Act and the rules and regulations of the
Commission thereunder, and that all statements of fact contained or to be
contained therein are or will be true and correct at the time indicated or on
the effective date as the case may be; that Sound Shore's Registration
Statement and Prospectus, when they shall become effective or be authorized
for use, will not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading to a purchaser of Shares. Sound Shore will
from time to time file such amendment or amendments to its Registration
Statement and Prospectus as, in the light of future developments, shall, in
the opinion of Sound Shore's counsel, be necessary in order to have such
Registration Statement and Prospectus at all times contain all material facts
required to be stated therein or necessary to make any statements therein not
misleading to a purchaser of Shares, but, if Sound Shore shall not file such
amendment or amendments within fifteen days after receipt of a written
request from Distributor to do so, Distributor may, at its option, terminate
this Agreement immediately. Sound Shore shall not file any amendment to its
Registration Statement and Prospectus without giving Distributor reasonable
notice thereof in advance; provided, however, that nothing in this Agreement
contained shall in any way limit Sound Shore's right to file at any time such
amendments to its Registration Statement and Prospectus, of whatever
character, as it deem advisable, such right being in all respects absolute
and unconditional. Sound Shore represents and warrants that any amendment to
its Registration Statement and Prospectus hereafter filed will, when it
becomes effective, contain all statements required to be stated therein in
accordance with the Securities Act and the rules and regulations of the
Commission thereunder, that all statements of fact contained therein will,
when the same shall become effective, be true and correct and that no such
amendment, when it becomes effective, will include an untrue statement of a
material fact or will omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading to a
purchaser of Shares.
(f) Sound Shore will indemnify, defend and hold Distributor, its several
officers and directors, and any person who controls Distributor within the
meaning of Section 15 of the Securities Act (collectively, the "Distributor
Indemnities"), free and harmless from and against any and all claims, demands,
liabilities and expenses (including the cost of investigating or defending such
claims, demands or liabilities and any counsel fees incurred in connection
therewith) which any Distributor Indemnity may incur, under the Securities Act,
or under common law or otherwise, arising out of or based upon any alleged
untrue
3
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statement of a material fact contained in Sound Shore's Registration
Statement and Prospectus under the Securities Act or arising out of or based
upon any alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading; provided,
however, that in no event shall anything contained in this paragraph (f) be
so construed as to protect Distributor against any liability to Sound Shore
or its security holders to which Distributor would otherwise be subject by
reason of willful misfeasance, bad faith, or gross negligence in the
performance of its duties, or by reason of its reckless disregard of its
obligations and duties under this Section 2. This agreement to indemnify
Distributor Indemnities is expressly conditioned upon Sound Shore being
notified of any action brought against any Distributor Indemnity, such
notification to be given by letter, facsimile transmission or telegram to
Sound Shore and referring to the person against whom such action is brought
within ten days after the summons or other first legal process shall have
been served on such person. The failure so to notify Sound Shore of any such
action shall not relieve Sound Shore from any liability which it may have to
any Distributor Indemnity otherwise than on account of the indemnification
provided for in this paragraph (f). Sound Shore will be entitled to assume
the defense of any suit brought to enforce any such claim, and to retain
counsel of good standing chosen by it and approved by Distributor. In the
event Sound Shore elects to assume the defense of any such suit and retain
counsel of good standing approved by Distributor, the defendants in such suit
shall bear the fees and expenses of any additional counsel retained by any of
them. In the event Sound Shore does not elect to assume the defense of any
such suit, or in case Distributor does not approve of counsel chosen by Sound
Shore or has been advised that it may have available defenses or claims which
are not available to or conflict with those available to Sound Shore, Sound
Shore will reimburse any Distributor Indemnity named as defendant in such
suit for the fees and expenses of any counsel retained by any such person.
The indemnification provisions contained in this paragraph (f) and Sound
Shore's representations and warranties in this Agreement shall remain
operative and in full force and effect regardless of any investigation made
by or on behalf of any Distributor Indemnity and shall survive the sale of
any Shares made pursuant to subscriptions obtained by Distributor. The
indemnification provisions of this paragraph (f) will inure exclusively to
the benefit of the Distributor Indemnities and their respective successors
and assigns. Sound Shore agrees promptly to notify Distributor of the
commencement of any litigation or proceeding against Sound Shore or any of
its directors or officers in connection with the issue or sale of Shares.
(g) Distributor agrees to indemnify, defend and hold Sound Shore, its
several officers and directors, and any person who controls Sound Shore within
the meaning of Section 15 of the Securities Act (collectively, the "Sound Shore
Indemnities"),
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free and harmless from and against any and all claims, demands, liabilities,
and expenses (including the cost of investigating or defending such claims,
demands or liabilities and any reasonable counsel fees incurred in connection
therewith) which any Sound Shore Indemnity may incur under the Act, or under
common law or otherwise, but only to the extent that such liability, or
expense incurred by Sound Shore Indemnities resulting from such claims or
demands shall arise out of or be based upon any alleged untrue statement of a
material fact contained in information furnished in writing by Distributor in
its capacity as distributor to Sound Shore for use in Sound Shore's
Registration Statement or Prospectus under the Securities Act, or shall arise
out of or be based upon any alleged omission to state a material fact in
connection with such information required to be stated in the Registration
Statement or Prospectus or necessary to make such information not misleading.
Distributor's agreement to indemnify Sound Shore Indemnities is expressly
conditioned upon Distributor being notified of any action brought against a
Sound Shore Indemnity, such notification to be given by letter, facsimile
transmission or telegram addressed and referring to the person against whom
such action is brought within ten days after the summons or other first legal
process shall have been served on such person. Distributor shall have a
right to control the defense of such action, with counsel of its own
choosing, satisfactory to Sound Shore, if such action is based solely upon
such alleged misstatement or omission on Distributor's part, and in any other
event Distributor and Sound Shore Indemnities named shall each have the right
to participate in the defense or preparation of the defense of any such
action. The failure so to notify Distributor of any such action shall not
relieve Distributor from any liability which it may have to any Sound Shore
Indemnity otherwise than on account of the indemnification provisions in this
paragraph (g).
(h) Sound Shore shall advise Distributor immediately: (i) of any request
by the Commission for amendments to Sound Shore's Registration Statement or
Prospectus or for additional information; (ii) in the event of the issuance by
the Commission of any stop order suspending the effectiveness of Sound Shore's
Registration Statement or Prospectus or the initiation of any proceedings for
that purpose; (iii) of the happening of any material event which makes untrue
any statement made in Sound Shore's Registration Statement or Prospectus or
which requires the making of a change in either thereof in order to make the
statements therein not misleading; and (iv) of all action of the Commission with
respect to any amendments to Sound Shore's Registration Statement or Prospectus
which may from time to time be filed with Commission under the Act or the
Securities Act.
SECTION 3. STANDARD OF CARE
The Distributor shall give Sound Shore the benefit of its best judgment and
efforts in rendering its services to Sound
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Shore and shall not be liable for error of judgment or mistake of law, for
any loss arising out of any investment, or in any event whatsoever, provided
that nothing herein shall be deemed to protect, or purport to protect, the
Distributor against any liability to Sound Shore or to the security holders
of Sound Shore to which it would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of its duties
hereunder, or by reason of reckless disregard of its obligations and duties
hereunder.
SECTION 4. EXPENSES
Subject to any expense reimbursement arrangements between the Distributor
or others and Sound Shore, Sound Shore shall be responsible and assumes the
obligation for payment of all its expenses.
SECTION 5. COMPENSATION
(a) The Distributor shall be entitled to no compensation or reimbursement
of expenses for the distribution services provided by the Distributor pursuant
to this Agreement.
(b) Notwithstanding anything in this Agreement to the contrary, the
Distributor and its affiliated persons may receive compensation or reimbursement
from Sound Shore with respect to (i) the provision of distribution services on
behalf of Sound Shore in accordance with any distribution plan adopted by Sound
Shore pursuant to Rule 12b-1 under the Act, (ii) the provision of shareholder
support or other services, (iii) the provision of management services or (iv)
service as a director or officer of Sound Shore.
SECTION 6. EFFECTIVENESS, DURATION AND TERMINATION
(a) This Agreement shall become effective on the date hereof. Upon the
effectiveness of this Agreement, it shall supersede all previous agreements
between Sound Shore and the Distributor covering the subject matter hereof.
(b) This Agreement shall continue in effect for twelve months and,
thereafter, shall continue in effect for successive twelve-month periods,
provided that such continuance is specifically approved at least annually (i) by
the Board or by a vote of a majority of the outstanding voting securities of
Sound Shore and (ii) by a vote of a majority of directors of Sound Shore who are
not parties to this Agreement or interested persons of any such party cast in
person at a meeting called for the purpose of voting on such approval. If the
continuation of this Agreement is not approved, the Distributor may continue to
render the services described herein in the manner and to the extent permitted
by the Act.
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(c) This Agreement may be terminated at any time, without the payment of
any penalty, (i) by the Board or by a vote of a majority of the outstanding
voting securities of Sound Shore on 60 days' written notice to the Distributor
(ii) by the Distributor on 60 days' written notice to Sound Shore. This
Agreement shall automatically terminate in the event of its assignment.
SECTION 8. ACTIVITIES OF DISTRIBUTOR
Except to the extent necessary to perform its obligations under this
Agreement, nothing herein shall be deemed to limit or restrict the Distributor's
right, or the right of any of its officers, directors or employees (whether or
not they are a director, officer, employee or other affiliated person of Sound
Shore) to engage in any other business or to devote time and attention to the
management or other aspects of any other business, whether of a similar or
dissimilar nature, or to render services of any kind to any other corporation,
trust, firm, individual or association.
SECTION 9. MISCELLANEOUS
(a) Except for the Schedules, no provisions of this Agreement may be
amended or modified in any manner except by a written agreement properly
authorized and executed by both parties hereto and, if required by the Act, by a
vote of a majority of the outstanding voting securities of Sound Shore.
(b) If any part, term or provision of this Agreement is held to be
illegal, in conflict with any law or otherwise invalid, the remaining portion or
portions shall be considered severable and not be affected, and the rights and
obligations of the parties shall be construed and enforced as if the Agreement
did no contain the particular part, term or provision held to be illegal or
invalid.
(c) Section headings in this Agreement are included for convenience only
and are not to be used to construe or interpret this Agreement.
(d) Notices, requests, instructions and communications received by the
parties at their respective principal places of business, or at such other
address as a party may have designated in writing, shall be deemed to have been
properly given.
(e) This Agreement shall be governed by and shall be construed in
accordance with the laws of the State of New York.
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<PAGE>
(f) The terms "vote of a majority of the outstanding voting securities,"
"interested person," "affiliated person" and "assignment" shall have the
meanings ascribed thereto in the Act.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
SOUND SHORE FUND, INC.
/s/ T. Gibbs Kane, Jr.
------------------------
T. Gibbs Kane, Jr.
President
FORUM FINANCIAL SERVICES, INC.
/s/ John Y. Keffer
------------------------
John Y. Keffer
President
8
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EXHIBIT 8(a)
<PAGE>
CUSTODIAN AGREEMENT
AGREEMENT, dated as of April 30, 1993, between Sound Shore Fund, Inc. (the
"Fund"), a corporation duly incorporated and existing under the laws of the
State of Maryland, and The First National Bank of Boston (the "Custodian"), a
banking institution duly organized under the laws of the United States:
WHEREAS, the Fund desires to appoint the Custodian as custodian of its
securities and cash and the Custodian is willing to act in such capacity upon
the terms and conditions set forth below; and
WHEREAS, the Custodian in its capacity as custodian will also collect and
apply the dividends and interest on securities in the manner and to the extent
set forth below;
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, the parties do hereby agree as follows:
SECTION 1. DEFINITIONS
The terms, as defined in this Section, whenever used in this Agreement or
in any amendment or supplement hereto shall have the meanings specified below,
insofar as the context will allow.
(a) Board: The term Board shall mean the Board of Directors of the Fund.
(b) Book-Entry Account: The term Book-Entry Account shall mean an account
maintained by a Federal Reserve Bank in which Book-Entry Securities are held.
(c) Book-Entry Securities: The term Book-Entry Securities shall mean
securities issued by the United States Treasury and United States Federal
agencies and instrumentalities that are maintained in the book-entry system of a
Federal Reserve Bank in accordance with the book-entry regulations of the
Treasury and the various Federal agencies and instrumentalities.
(d) Custodian: The term Custodian shall mean The First National Bank of
Boston, in its capacity as custodian under this Agreement.
(e) Fund: The term Fund shall mean Sound Shore Fund, Inc.
(f) Oral Instructions: The term Oral Instructions shall mean an
authorization, instruction, approval, item or set of
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data, or information of any kind transmitted to the Custodian inperson or by
telephone, vocal telegram or other electronic means, by a person or persons
reasonably believed in good faith by the Custodian to be a person or persons
authorized by a resolution of the Board to give Oral Instructions on behalf
of the Fund. Each Oral Instruction shall specify whether it is applicable to
the Fund or a specific Series.
(g) Securities: The term Securities shall mean bonds, debentures, notes,
stocks, shares, evidences of indebtedness, and other securities and investments
from time to time owned by the Fund.
(h) Securities Depository: The term Securities Depository shall mean a
clearing corporation registered under Section 17A of the 1934 Act which
maintains a system for the central handling of securities in which all
securities of any particular class or series of any issuer deposited within the
system are treated as fungible and may be transferred or pledged by bookkeeping
entry without physical delivery of the securities.
(i) Series: The term Series shall mean the Sound Shore Fund or any
portfolio that the Fund shall subsequently establish and appoint the Custodian
as custodian thereof and the Custodian shall accept.
(j) Sub-Custodian: The term Sub-Custodian shall mean a sub-custodian
approved by the Fund as provided in Section 17.
(k) Written Instructions: The term Written Instruction shall mean an
authorization, instruction, approval, item or set of data, or information of any
kind transmitted to the Custodian in original writing containing original
signatures, or a copy of such document transmitted by telecopy, including
transmission of such signature, or other mechanical or documentary means, at the
request of a person or persons reasonably believed in good faith by the
Custodian to be a person or persons authorized by a resolution of the Board to
give Written Instructions on behalf of the Fund. Each Written Instruction shall
specify whether it is applicable to the Fund or a specific Series.
(l) 1934 Act: The term 1934 Act shall mean the Securities Exchange Act of
1934, as amended.
(m) 1940 Act: The term 1940 Act shall mean the Investment Company Act of
1940, as amended.
SECTION 2. RESOLUTIONS FOR INSTRUCTIONS
The Fund shall, as necessary, file with the Custodian a certified copy of
the operative resolution of the Board authorizing execution of Written
Instructions and the number of
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signatories required and setting forth authentic signatures of all
signatories authorized to sign on behalf of the Fund or any Series thereof.
Such resolution shall constitute conclusive evidence of the authority of all
signatories designated therein to act and shall be considered in full force
and effect, with the Custodian fully protected in acting in reliance thereon,
until the Custodian receives a certified copy of a replacement resolution
adding or deleting a person or persons authorized to give Written
Instructions.
The Fund shall, as necessary, file with the Custodian a certified copy of
the operative resolution of the Board authorizing the transmittal of Oral
Instructions and specifying the person or persons authorized to give Oral
Instructions on behalf of the Fund or any Series thereof. This resolution shall
constitute conclusive evidence of the authority of the person or persons
designated therein to act and shall be considered in full force and effect, with
the Custodian fully protected in acting in reliance therein, until the Custodian
actually receives a certified copy of a replacement resolution adding or
deleting a person or persons authorized to give Oral Instructions. If the
officer certifying the resolution is authorized to give Oral Instructions, the
certification shall also be signed by a second officer of the Fund authorized to
give Written Instructions.
SECTION 3. AUTHORIZATION FOR CUSTODIAN TO ACT
For all purposes under this Agreement, the Custodian is authorized to act
upon receipt of the first of any Written or Oral Instruction it receives. If
the first Instruction is an Oral Instruction, the Fund shall be responsible for
delivering, or having delivered to the Custodian, a confirmatory Written
Instruction; and in cases where the Custodian receives an Instruction, whether
Written or Oral, with respect to a portfolio transaction, the Fund shall cause
the broker or dealer to send a written confirmation of the transaction to the
Custodian. The Custodian shall be entitled to rely on the first Instruction
received and, for any act or omission undertaken in compliance therewith, shall
be free of liability and fully indemnified and held harmless by the Fund. The
sole obligation of the Custodian with respect to any confirmatory Written
Instruction or broker or dealer written confirmation shall be to make reasonable
efforts to detect any discrepancy between the original Instruction and such
confirmation and to report such discrepancy to the Fund. The Fund shall be
responsible, at the Fund's expense, for taking any action, including any
reprocessing, necessary to correct any discrepancy or error, and to the extent
such action requires the Custodian to act, the Fund shall give the Custodian
specific Written Instructions as to the action required.
SECTION 4. APPOINTMENT AS CUSTODIAN
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The Fund hereby appoints the Custodian as custodian of the Securities and
cash of each Series from time to time on deposit hereunder (collectively,
"assets"). The Securities held by the Custodian, unless payable to bearer or
maintained in a Securities Depository or Book-Entry Account pursuant to Section
5, shall be registered in the name of the Custodian or in the name of its
nominee, or if directed by Written Instructions, in the name of the Fund or its
nominee. Securities, excepting bearer securities, delivered from time to time
to the Custodian in certificated form shall, in all cases, be in due form for
transfer, or registered as above provided. The assets of the Fund shall be and
remain the sole property of the Fund and the Custodian shall have only custody
thereof.
The Custodian shall hold, earmark and physically segregate for the
appropriate Series account of the Fund all non-cash property, including all
Securities that are not maintained pursuant to Section 5 in a Securities
Depository or Book-Entry Account.
The Custodian shall open and maintain a separate bank account or accounts
in the name of the Fund, subject only to draft or order by the Custodian acting
pursuant to the terms of this Agreement, and shall hold in such account or
accounts, subject to the provisions hereof, all cash received by it from or for
the account of the Fund. Notwithstanding the foregoing, a separate bank account
may be established by the Fund to be used as a petty cash account in accordance
with Rule 17f-3 under the 1940 Act and the Custodian shall have no duty or
liability with regard to such account.
Upon receipt of Written Instructions, cash held by the Custodian for the
Fund shall be deposited by the Custodian to the Custodian's credit in the
banking department of the Custodian or in such other banks or Fund companies as
it may in its discretion deem necessary or desirable. Such funds shall be
deposited by the Custodian in its capacity as Custodian and shall be
withdrawable by the Custodian only in that capacity.
SECTION 5. DEPOSIT OF FUND ASSETS
The Fund hereby authorizes the Custodian to deposit assets of the Series as
follows:
(a) deposit with the Custodian or any other bank licensed and examined by
the United States or any state thereof assets held in the Option Account created
pursuant to Section 11;
(b) deposit in the Custodian's account(s) with any Securities Depository
all or any part of the Securities as may from time to time be held for the Fund;
and
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(c) deposit Book-Entry Securities belonging to the Fund in a Book-Entry
Account maintained for the Custodian.
So long as any deposit referred to in (b) or (c) above is maintained for
the Fund, the Custodian shall
(i) deposit the Securities in an account that includes only assets held
by it for customers;
(ii) send the Fund a confirmation (i.e., an advice of notice of
transaction) of any transfers of the Fund to or from the account;
(iii) with respect to Securities of the Fund transferred to the account,
identify as belonging to the Fund a quantity of securities in a fungible
bulk of securities that are registered in the name of the Custodian or its
nominee, or shown on the Custodian's account on the books of the Securities
Depository, the Book-Entry System, or the Custodian's agent;
(iv) promptly send to the Fund all reports it receives from the
appropriate Federal Reserve Bank or Securities Depository on its respective
system of internal accounting control; and
(v) send to the Fund such reports of the systems of internal accounting
control of the Custodian and its agents through which such Securities are
deposited as are available and as the Fund may reasonably request from time
to time.
The Fund warrants that the Board has approved the arrangement for the
deposit of Securities in Securities Depositories and in Book-Entry Accounts.
The Custodian shall not waive any rights it may have against a Securities
Depository or Federal Reserve Bank. The Fund may elect to be subrogated to the
rights of the Custodian against the Securities Depository or Federal Reserve
Bank or any other person with respect to any claim that the Custodian may have
as a consequence of any loss or damage suffered by the Fund as a result of the
Custodian's use of a Securities Depository or Book Entry Account if and to the
extent that the Fund has not been made whole for any such loss or damage.
SECTION 6. TRANSFER OF ASSETS TO CUSTODIAN
The Fund will initially transfer and deposit or cause to be transferred and
deposited with the Custodian all of the assets owned by each Series at the time
this Agreement becomes effective. Such transfer and deposit shall be evidenced
by appropriate schedules duly executed by the Fund. The Fund will
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<PAGE>
deposit with the Custodian additional Securities of the Fund and dividends or
interest collected on such Securities as the same are acquired from time to
time.
The Fund will cause to be deposited with the Custodian from time to time
(i) the net proceeds of Securities sold, (ii) the applicable net asset value of
shares of the Fund sold, whether representing initial issue or any other
securities and (iii) cash as may be acquired.
SECTION 7. DISBURSEMENTS
The Custodian is hereby authorized and directed to disburse cash from time
to time as follows:
(a) for the purchase of Securities by the Fund, upon receipt by the
Custodian of (i) Written or Oral Instructions specifying the Securities and
stating the purchase price and the name of the broker, investment banker or
other party to or upon whose order the purchase price is to be paid and
(ii) either the Securities so purchased, in due form for transfer or already
registered as provided in Section 4, or notification by a Securities Depository
or a Federal Reserve Bank that the Securities have been credited to the
Custodian's account with the Securities Depository or Federal Reserve Bank;
(b) for transferring funds, including mark-to-the-market payments, as
directed by the Fund in connection with a repurchase agreement covering
Securities that have been received by the Custodian as provided in subsection
(a) above, upon receipt by the Custodian of Written or Oral Instructions
specifying the Securities, the purchase price and the party to whom the purchase
price is to be paid;
(c) to advance or pay out accrued interest on bonds purchased, cash
dividends on stocks sold and similar items. In the event that any Securities
are registered in the name of the Fund or its nominee, the Fund will endorse, or
cause to be endorsed, to the Custodian dividend and interest checks, or will
issue appropriate orders to the issuers of the Securities to pay dividends and
interest to the Custodian;
(d) for transferring funds as directed by the Fund to its redemption
paying agent;
(e) for exercising warrants and rights received upon the Securities, upon
timely receipt of Written or Oral Instructions authorizing the exercise of such
warrants and rights and stating the consideration to be paid;
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<PAGE>
(f) for repaying, in whole or in part, any loan of the Fund, upon receipt
of Written or Oral Instructions directing payment;
(g) for transferring funds to any Sub-Custodian, upon receipt of Written
or Oral Instructions and upon agreement by the Custodian; and
(h) to disburse money to or upon the order of the Fund, as it may from
time to time direct for the following purposes;
(i) to pay proper compensation and expenses of the Custodian;
(ii) to transfer funds to the Fund's dividends disbursing agent;
(iii) to pay, or provide the Fund with money to pay, taxes, upon receipt of
appropriate Written or Oral Instructions;
(iv) to transfer funds to a separate checking account maintained by the
Fund pursuant to Section 17(f) of the 1940 Act; and
(v) to pay interest, management or supervisory fees, administration,
dividend and transfer agency fees and costs, compensation of personnel and
operating expenses, including but not limited to fees for legal, accounting
and auditing services. Before making any such payment or disbursement,
however, the Custodian shall receive, and may conclusively rely upon,
Written or Oral Instructions requesting such payment or disbursement and
stating that it is for one or more or the purposes enumerated above.
Notwithstanding the foregoing, the Custodian may disburse cash for other
corporate purposes; provided, however, that such disbursement may be made
only upon receipt of Written or Oral Instructions stating that such
disbursement was authorized by resolution of the Board as a proper
corporate purpose.
The determination of the Board as to what shall constitute income derived
from the Securities, as distinguished from principal or capital, shall be final
and conclusive upon the Fund, the Custodian and the shareholders of the Fund.
SECTION 8. DELIVERY OF SECURITIES
The Custodian is hereby authorized and directed to deliver Securities of
the Fund from time to time as follows:
(a) for completing sales of Securities sold by the Fund, upon receipt of
(i) Written or Oral Instructions specifying the
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Securities sold, the amount to be received and the broker, investment
banker or other party to or upon whose order the Securities are to be
delivered and (ii) the net proceeds of sale; provided, however, that the
Custodian may accept payment in connection with the sale of Book-Entry
Securities and Securities on deposit with a Securities Depository by means of
a credit in the appropriate amount to the account described in Section 5(b)
or (c) above; and provided further, that the Custodian may advance the
proceeds of sale to the Fund pending the completion of the sale or the return
to the Fund of the Securities in the event the sale fails to be completed.
Any such advance shall be at the Custodian's risk and the Custodian shall be
subrogated to the Fund's rights against any other person in the event the
sale is not completed and the Fund's Securities are not returned;
(b) for exchanging Securities for other Securities (and cash, if
applicable), upon timely receipt of (i) Written or Oral Instructions stating the
Securities to be exchanged, cash to be received and the manner in which the
exchange is to be made and (ii) the other Securities (and cash, if applicable)
as specified in the Written or Oral Instructions;
(c) for exchanging or converting Securities pursuant to their terms or
pursuant to any plan of conversion, consolidation, recapitalization,
reorganization, readjustment or otherwise, upon timely receipt of (i) Written or
Oral Instructions authorizing such exchange or conversion and stating the manner
in which such exchange or conversion is to be made and (ii) the Securities,
certificates of deposit, interim receipts, and/or cash to be received as
specified in the Written or Oral Instructions;
(d) for presenting for payment Securities that have matured or have been
called for redemption;
(e) for depositing with the lender Securities to be held as collateral for
a loan to the Fund, upon receipt of Written or Oral Instructions directing
delivery to the lender;
(f) in connection with a repurchase agreement, upon receipt of Written or
Oral Instructions stating (i) the Securities to be delivered and the payment to
be received and (ii) payment;
(g) for depositing with a depository agent in connection with a tender or
other similar offer to purchase portfolio Securities of the Fund, upon receipt
of Written or Oral Instructions;
(h) for depositing Securities with the issuer thereof, or its agents, for
the purpose of transferring such Securities into the name of the Fund, the
Custodian or any nominee of either in accordance with Section 4; and
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(i) for other proper corporate purposes; provided, that the Custodian
shall receive Written or Oral Instructions requesting such delivery.
SECTION 9. BORROWINGS
The Fund will cause any bank (including the Custodian) from which it
borrows money using Securities as collateral to deliver to the Custodian a
notice of undertaking in the form then currently employed by the lender setting
forth the amount that the lender will loan to the Fund against delivery of a
stated amount of collateral. The Fund shall promptly deliver to the Custodian
Written or Oral Instructions for each loan, stating (i) the name of the lender
and the amount of loan; and (ii) the name of the issuer, the title and the
number of shares or principal amount of the Securities to be delivered as
collateral. The Custodian shall deliver as directed by the Fund such specified
collateral, if any, and receive from the lender the total amount of the loan
proceeds; provided, however, that no delivery of Securities shall occur if the
amount of loan proceeds does not conform to the amount set forth in the Written
or Oral Instructions, or if such Instructions do not contain the requirements of
(ii) above.
The Custodian shall deliver, from time to time, any Securities required as
additional collateral for any transaction described in this Section, upon
receipt of Written or Oral Instructions. The Fund shall cause all Securities
released from collateral status to be returned directly to the Custodian.
SECTION 10. ADVANCEMENTS
If, in its sole discretion, the Custodian advances funds to the Fund to pay
for the purchase of Securities, to cover an overdraft of the Fund's account with
the Custodian, or to pay any other indebtedness to the Custodian, the Fund's
indebtedness shall be deemed to be a loan by the Custodian to the Fund, payable
on demand and bearing interest at the rate then charged by the Custodian for
such loans; provided, however, that the Custodian shall obtain the Fund's prior
approval for any advance of funds other than for the purpose of settling a
Securities trade. The Fund hereby agrees that the Custodian shall have a
continuing lien and security interest, to the extent of any such overdraft or
indebtedness, and to the extent required by Regulation U of the Board of
Governors of the Federal Reserve System in the event any security interest is
taken in "margin stock" as therein defined, in any property then held by the
Custodian or its agents for the benefit of the Fund, or in which the Fund may
have an interest. The Fund authorizes the Custodian, in its sole discretion at
any time, to charge any such overdraft or indebtedness, together with interest
due thereon, against any balance then credited to the Fund on the Custodian's
books.
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SECTION 11. OPTION CONTRACTS
The Custodian's responsibilities regarding put and call option contracts
will be governed by the following subsections:
(a) With respect to puts and calls traded on securities exchanges:
(i) The Custodian shall take action as to put options ("puts") and call
options ("calls") purchased or sold (written) by the Fund regarding escrow
or other arrangements (i) in accordance with the provisions of any
agreement between the Custodian, any broker-dealer registered under the
1934 Act, and a member of the National Association of Securities Dealers,
Inc. and, if necessary, the Fund relating to compliance with the rules of
the Options Clearing Corporation ("OCC") and of any registered national
securities exchange, or of any similar organization or organizations, or
(ii) alternatively, in accordance with subsection (d) as to covered call
options written by the Fund.
(ii) The Custodian shall be under no duty or obligation to see that the
Fund has deposited or is maintaining adequate margin, if required, with any
broker in connection with any option, nor shall the Custodian be under any
duty or obligation to present such option to the broker for exercise unless
it receives proper Instructions from the Fund. The Custodian shall have no
responsibility for the legality of any put or call purchased or sold on
behalf of the Fund, the propriety of any such purchase or sale, or the
adequacy of any collateral delivered to a broker in connection with an
option or deposited to or withdrawn from a Segregated Account as described
in subsection (c) of this Section 11. The Custodian specifically, but not
by way of limitation, shall not be under any duty or obligation to: (i)
periodically check or notify the Fund that the amount of collateral held by
a broker or held in a Segregated Account as described in subsection (c) of
this Section 11 is sufficient to protect the broker against any loss; (ii)
effect the return of any collateral delivered to a broker; or (iii) advise
the Fund that any option it holds has or is about to expire. Such duties
or obligations shall be the sole responsibility of the Fund.
(b) With respect to puts, calls and futures traded on commodities
exchanges:
(i) The Custodian shall take action as to puts, calls and futures
contracts ("futures") purchased or sold by the Fund in accordance with the
provisions of any agreement among the Fund, the Custodian and a futures
commission merchant registered under the Commodity Exchange Act, as
amended, relating to compliance with the rules of the Commodity Futures
Trading Commission and/or any contract market, or any similar organization
or
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organizations, regarding account deposits in connection with
transactions by the Fund.
(ii) The responsibilities and liabilities of the Custodian as to futures,
puts and calls traded on commodities exchanges, any futures commission
merchant account and the Segregated Account shall be limited as set forth
in subsection (a)(2) of this Section 11 as if such subsection referred to
futures commission merchants rather than brokers, and futures and puts and
calls thereon instead of options.
(c) The Custodian shall upon receipt of Oral or Written Instructions
establish and maintain a Segregated Account or Accounts for and on behalf of the
Fund, into which Account or Accounts may be transferred cash and Securities (i)
in accordance with the provisions of any agreement among the Fund, the Custodian
and a broker-dealer registered under the 1934 Act and a member of the National
Association of Securities Dealers, Inc. or any futures commission merchant
registered under the Commodity Exchange Act, relating to compliance with the
rules of OCC and of any registered national securities exchange or the Commodity
Futures Trading Commission or any registered contract market, or of any similar
organization or organizations regarding escrow or other arrangements in
connection with transactions by the Fund, and (ii) for the purpose of
segregating cash or Securities in connection with options written by the Fund,
and (iii) for the purposes of compliance by the Fund with the procedures
required by 1940 Act Release No. 10666, as interpreted, or any subsequent
release or releases of the Securities and Exchange Commission relating to the
maintenance of Segregated Accounts by registered open-end investment companies
and (iv) for other proper corporate purposes, but only, in the case of clause
(iv), upon receipt of, in addition to Written or Oral Instructions, a certified
copy of a resolution of the Board signed by an officer of the Fund and certified
by the Secretary or an Assistant Secretary, setting forth the purpose or
purposes of such Segregated Account and declaring such purposes to be proper
corporate purposes.
(d) Upon receipt of Written or Oral Instructions, the Custodian will
execute, or cause a Sub-Custodian or depository to execute, an escrow receipt
relating to a call option written by the Fund and will deliver such escrow
receipt against receipt of payment of the premium therefor or, in the case of
call option contracts issued by OCC, an escrow deposit form of OCC pursuant to
the Escrow Deposit Agreement in effect from time to time between the Custodian
and OCC. The Instruction shall contain all information necessary for the
issuance of such receipt or deposit form and will authorize the deposit of the
securities specified therein into an escrow account which will be held by the
Custodian or a depository subject to the terms of such escrow receipt or deposit
form. However, the Custodian agrees that it will not deliver or cause a
depository to deliver any securities deposited in an escrow account pursuant to
an exercise notice unless the Custodian has received Oral or Written Instruction
to do so or (i) the Custodian has duly requested the issuance of such
Instruction; (ii) at least two business days have elapsed since the receipt of
such request
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to the Fund; and (iii) the Fund has not advised the Custodian that it has
purchased Securities that are to be delivered pursuant to the exercise
notice. The Fund shall be subrogated to the rights of the Custodian against
any party for any claim the Custodian may have as a result of the Custodian's
delivery or directing delivery of Securities deposited in an escrow account
other than pursuant to an Instruction by the Fund. The Fund agrees that it
will not issue an Instruction which shall conflict with the terms of any
escrow receipt executed by the Custodian or any depository in relation to the
Fund which is then in effect. The Custodian need not maintain any written
evidence of any call written by the Fund as part of its duties under this
Agreement. The Fund may write calls on securities ("underlying securities")
which are not owned by the Fund and may issue an Instruction to the Custodian
to execute, or cause a depository to execute, an escrow receipt or deposit
form on securities ("convertible securities") which are, or are to be, owned
by the Fund and are convertible into the underlying securities. In such
event, any Instruction as to the execution of the escrow receipt or deposit
form will relate only to such convertible securities but any instruction as
to the delivery of such securities may direct the Custodian to convert the
same.
SECTION 12. VOTING AND CONSENT RESPONSIBILITY
The Custodian assumes no duty, obligation or responsibility whatsoever to
exercise any voting or consent powers with respect to the Securities held by it
from time to time hereunder. The Fund or such person or persons as it may
designate shall have the right to vote, consent or otherwise act with respect to
such Securities. The Custodian will exercise those efforts reasonably believed
in good faith by the Custodian to be adequate in the circumstances ("Best
Efforts") to furnish to the Fund in a timely manner all proxies or other
appropriate authorizations with respect to Securities registered in the name of
the Custodian or its nominee, so that the Fund or its designee may vote, consent
or otherwise act.
SECTION 13. COMPENSATION
The Fund agrees to pay to the Custodian compensation for its services as
set forth in Schedule A hereto attached, or as shall be set forth in written
amendments to such Schedule approved by the Fund and the Custodian from time to
time.
SECTION 14. CORPORATE ACTIONS
The Custodian will exercise Best Efforts to forward to the Fund in a timely
manner all notices of stockholder meetings, proxy statements, annual reports,
conversion notices, call notices, or other notices or written materials of any
kind (excluding stock certificates and dividend and interest payments) received
by the Custodian as registered owner of Securities
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("notices and materials"). The Fund and its investment adviser have primary
responsibility for taking action on such notices and materials.
Upon receipt of warrants or rights issued in connection with the assets of
the Fund, the Custodian shall enter into its ledgers appropriate notations
indicating such receipt and shall notify the Fund of such receipt. However, the
Custodian shall have no obligation to take any other action with respect to such
warrants or rights, except as directed in Written or Oral Instructions.
SECTION 15. BOOKS AND RECORDS
The Custodian acknowledges and agrees that all books and records maintained
for the Fund in any capacity under this Agreement are the property of the Fund
and may be inspected by the Fund or any authorized regulatory agency at any
reasonable time. Upon request all such books and records will be surrendered
promptly to the Fund. The Custodian agrees to make available upon request and
to preserve for the periods prescribed in Rule 31a-2 under the 1940 Act any
records related to services provided under this Agreement and required to be
maintained by Rule 31a-1 of such Act.
SECTION 16. LIABILITY OF CUSTODIAN
The Custodian assumes no duty, obligation or responsibility whatsoever with
respect to Securities not deposited with the Custodian.
The Custodian assumes only the duties and obligations specifically set
forth herein, and duties incidental thereto normally performed by custodians of
mutual funds. It specifically assumes no responsibility for the management,
investment or reinvestment of the Securities from time to time owned by the
Fund, whether or not on deposit hereunder. The responsibility for the proper
and timely management, investment and reinvestment of such Securities shall be
that of the Fund and its investment advisor.
The Custodian shall not be liable for any taxes, assessments or
governmental charges that may be levied or assessed upon the Securities held by
it hereunder, or upon the income therefrom. Upon Written or Oral Instructions,
the Custodian may pay any such tax, assessment or charge and reimburse itself
out of the monies of the Fund or the Securities held hereunder.
The Custodian may rely upon the advice of counsel, who may be counsel for
the Fund or for the Custodian, and upon statements of accountants, brokers or
other persons believed by it in good faith to be expert in the matters upon
which they are consulted.
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The Custodian shall not be liable for any action taken in good faith
reliance upon such advice or statements. The Custodian shall not be liable
for action taken in good faith in accordance with any Written or Oral
Instructions, request or advice of the Fund or its officers, or information
furnished by the Fund or its officers. The Custodian shall not be liable for
any non-negligent action taken in good faith and reasonably believed by it to
be within the powers conferred upon it by this Agreement.
No liability of any kind, other than to the Fund, shall attach to the
Custodian by reason of its custody of the Securities and cash of the Fund under
this Agreement or otherwise as a result of its custodianship. In the event that
any claim shall be made against the Custodian, it shall have the right to pay
the claim and reimburse itself from the assets of the Fund in its hands;
provided, however, that no such reimbursement shall occur unless the Fund is
notified of the claim and is afforded an opportunity to defend the claim, if it
so elects. Except as otherwise provided herein, the Fund shall further agree to
indemnify and hold the Custodian harmless for any loss, claim, damage, expense
or liability arising out of the custodian relationship under this Agreement;
provided such loss, claim, damage, expense or liability is not the direct result
of the Custodian's negligence or willful misconduct.
SECTION 17. SUB-CUSTODIANS
Upon receipt of Written or Oral Instructions to appoint a Sub-Custodian,
which shall be deemed a Fund approval of the appointment, the Custodian shall
appoint one or more banking institutions licensed and examined by the United
States or any state thereof as Sub-Custodian of Securities and cash of the Fund
from time to time; provided, however, that the Custodian shall have requested
appointment of a Sub-Custodian.
The Custodian shall have no liability to the Fund or any other person by
reason of any act or omission of any Sub-Custodian, and the Fund shall indemnify
the Custodian and hold it harmless from and against any and all actions, suits
and claims, whether groundless or otherwise, and from and against any and all
losses, damages, costs, charges, counsel fees, payments, expenses and
liabilities arising directly of indirectly out of or in connection with the
performance of any Sub-Custodian; provided, however, that the Custodian shall,
and hereby does, assign to the Fund any and all claims for any losses, costs,
expenses, or damages that may be incurred by the Fund by reason of the
negligence, gross negligence or misconduct of any Sub-Custodian, or by reason of
the failure of a Sub-Custodian to perform in accordance with any applicable
agreement, including instructions of the Custodian of the Fund. The Custodian
shall be under no obligation to prosecute or to defend any action, suit or claim
arising out of, or in connection with, the performance of any Sub-Custodian, if,
in the opinion of the Custodian's counsel,
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such action will involve the Custodian in expense or liability. The Fund
shall, upon request, furnish the Custodian with satisfactory indemnity
against such expense or liability, and upon request of the Custodian, the
Fund shall assume the entire defense of any action, suit, or claim subject to
the foregoing indemnity.
The Fund shall pay all fees and expenses of any Sub-Custodian.
SECTION 18. EFFECTIVENESS, AMENDMENT, TERMINATION
(a) This Agreement shall become effective as of the date set forth on the
first page hereof.
(b) This Agreement may be amended from time to time by a written
supplemental agreement executed by the Fund and the Custodian.
(c) This Agreement may be terminated by either party upon notice to the
other. The termination shall become effective at the time specified in the
notice but no earlier than sixty (60) days after the date of the notice. Upon
notice of termination, the Fund shall use Best Efforts to obtain a successor
custodian. If a successor custodian is not appointed within sixty (60) days
after the date of the notice of termination, the Board shall, by resolution,
designate the Fund as its own custodian. Each successor custodian shall be a
person qualified to serve under the 1940 Act. Promptly following receipt of
written notice from the Fund of the appointment of a successor custodian and
receipt of Written or Oral Instructions, the Custodian shall deliver upon
payment of the Custodian's reasonable charges and disbursements and any other
amounts due all Securities and cash it then holds directly to the successor
custodian and shall, upon request of the Fund and the successor custodian,
execute and deliver to the successor custodian an instrument approved by its
counsel transferring to the successor custodian all the rights, duties and
obligations of the Custodian, transfer to the successor custodian the originals
or copies of all books and records maintained by the Custodian hereunder and
cooperate with, and provide reasonable assistance to, the successor custodian in
the establishment of the books and records necessary to carry out its
responsibilities hereunder. If the Board fails to designate a successor
custodian or to designate the Fund as its own custodian within sixty (60) days
after the date of the notice of termination, the Custodian may, at the expense
of the Fund, apply to the Federal District Court for the Commonwealth of
Massachusetts for further direction as to the disposition of the Fund's assets.
Notwithstanding the termination of this Agreement, the Custodian shall be
obligated to safeguard the assets of the Fund and may change reasonable and
customary fees for doing so pending receipt by the court or the Fund of
instructions for delivery of all securities and cash held, but
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the Custodian shall have no obligation to process any other transactions or
perform any other custodial functions following termination of this
Agreement. Upon delivery of the Securities and other assets of the Fund and
compliance with the other requirements of this Section 18, the Custodian
shall have no further duty or liability hereunder. Every successor custodian
appointed hereunder shall execute and deliver an appropriate written
acceptance of its appointment and shall thereupon become vested with the
rights, powers, obligations and custody of the predecessor custodian.
SECTION 19. BUSINESS DAYS
Nothing contained in this Agreement is intended to or shall require the
Custodian in any capacity hereunder to perform any functions or duties on any
holiday, weekend or weekday on which the Custodian or the New York Stock
Exchange is closed or permitted by law to be closed. Functions or duties
normally scheduled to be performed on such days shall be performed on, and as
of, the next business day on which both the New York Stock Exchange and the
Custodian are open, unless otherwise required by law.
SECTION 20. MISCELLANEOUS
(a) This Agreement may be executed in more than one counterpart, each of
which shall be deemed to be an original, and all of which together shall
constitute one and the same instrument.
(b) This Agreement shall extend to and bind the parties hereto and their
respective successors and assigns; provided, however, that this Agreement shall
not be assignable by the Fund without the written consent of the Custodian, or
by the Custodian without the written consent of the Fund, authorized or approved
by a resolution of the Board. Notwithstanding the foregoing, either party may
assign this Agreement without the consent of the other party so long as the
assignee is an affiliate, parent or subsidiary of the assigning party and the
assignee of the Custodian is qualified to serve as custodian under the 1940 Act.
(c) Headings in this Agreement are included for convenience only and are
not to be used to construe or interpret this Agreement.
(d) This Agreement shall be governed by the laws of the Commonwealth of
Massachusetts.
WITNESS the following signatures:
SOUND SHORE FUND, INC.
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BY: /s/ T. Gibbs Kane, Jr.
------------------------------
T. Gibbs Kane, Jr.
President
THE FIRST NATIONAL BANK OF BOSTON
BY: /s/ Janice Charbonnier
------------------------------
NAME: Janice Charbonnier
----------------------------
TITLE: Senior Manager
---------------------------
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EXHIBIT 8(B)
<PAGE>
SOUND SHORE FUND, INC.
TRANSFER AGENCY AGREEMENT
AGREEMENT, dated as of January 1, 1996, between Sound Shore Fund, Inc.
(the "Fund"), a corporation operating as an open-end investment company under
the Investment Company Act of 1940, duly organized and existing under the laws
of the State of Maryland, and Forum Financial Corp. ("FFC"), a corporation
organized under the laws of the State of Delaware.
WHEREAS, FFC has agreed to act as Transfer Agent for the Fund for the
purpose of recording the transfer, issuance and redemption of Shares of the
Fund, transferring the Shares of the Fund and disbursing dividends and other
distributions to Shareholders;
NOW THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, the parties do hereby agree as follows:
SECTION 1. The Fund hereby appoints FFC as its Transfer Agent and FFC
agrees to act in such capacity upon the terms set forth in this Agreement.
SECTION 2. The Fund shall furnish to FFC a supply of blank Share
Certificates and, from time to time, will renew such supply upon FFC's request.
Blank Share Certificates shall be signed manually or by facsimile signatures of
officers of the Fund authorized to sign by law or the By-Laws of the Fund and,
if required by FFC, shall bear the Fund's seal or a facsimile thereof.
SECTION 3. FFC shall make original issues of Shares in accordance with
Section 13 below and the Fund's then current prospectus (the "Prospectus"), upon
receipt of (i) Written Instructions requesting the issuance, (ii) a certified
copy of a resolution of the Fund's Board of Directors authorizing the issuance,
(iii) necessary funds for the payment of any original issue tax applicable to
such Shares, and (iv) an opinion of the Fund's counsel as to the legality and
validity of the issuance, which opinion may provide that it is contingent upon
the filing by the Fund of an appropriate notice with the Securities and Exchange
Commission, as required by Rule 24f-2 of the Investment Company Act of 1940, as
amended from time to time. If the opinion described in (iv) above is contingent
upon a filing under such rule, the Fund shall fully indemnify FFC for any
liability arising from the failure of the Fund to comply with such rule.
SECTION 4. Transfers of Shares shall be registered and, subject to the
provisions of Section 10, new Share Certificates shall be issued by FFC upon
surrender of outstanding Share Certificates in the form deemed by FFC to be
properly endorsed for transfer, which form shall include (i) all necessary
endorsers' signatures guaranteed by a member firm of a national securities
exchange or a domestic commercial bank, (ii) such assurances as FFC may deem
necessary to evidence the genuineness and effectiveness of each endorsement and
(iii) satisfactory evidence of compliance with all applicable laws relating to
the payment or collection of taxes.
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SECTION 5. FFC shall forward Share Certificates in "non-negotiable"
form by first-class or registered mail, or by whatever means FFC deems equally
reliable and expeditious. While in transit to the addressee, all deliveries of
Share Certificates shall be insured by FFC as it deems appropriate. FFC shall
not mail Share Certificates in "negotiable" form, unless requested in writing by
the Fund and fully indemnified by the Fund to FFC's satisfaction.
SECTION 6. In registering transfers of Shares, FFC may rely upon the
Uniform Commercial Code as in effect in the State of Maine, or any other
statutes that, in the opinion of FFC's counsel, protect FFC and the Fund from
liability arising from (i) not requiring complete documentation, (ii)
registering a transfer without an adverse claim inquiry, (iii) delaying
registration for purposes of such inquiry or (iv) refusing registration whenever
an adverse claim requires such refusal.
SECTION 7. FFC may issue new Share Certificates in place of those lost,
destroyed or stolen, upon receiving indemnity satisfactory to FFC, and may issue
new Share Certificates in exchange for, and upon surrender of, mutilated Share
Certificates as FFC deems appropriate.
SECTION 8. Unless otherwise directed by the Fund, FFC may issue or
register Share Certificates reflecting the signature, or facsimile thereof, of
an officer who has died, resigned or been removed by the Fund. The Fund shall
file promptly with FFC approval, adoption or ratification of such action as may
be required by law or by FFC.
SECTION 9. FFC shall maintain customary stock registry records for the
Fund, noting the issuance, transfer or redemption of Shares and the issuance and
transfer of Share Certificates. FFC may also maintain an account entitled
"Unissued Certificate Account," in which it will record the Shares, and
fractions thereof, issued and outstanding from time to time for which issuance
of Share Certificates has not been requested. FFC is authorized to keep records
containing the names and addresses of record of Shareholders, and the number of
Shares, and fractions thereof, from time to time owned by them for which no
Share Certificates are outstanding. Each Shareholder will be assigned a single
account number even though Shares for which Certificates have been issued will
be accounted for separately.
SECTION 10. FFC shall issue Share Certificates for Shares only upon
receipt of a written request from a Shareholder. If Shares are purchased
without such request, FFC shall merely note on its stock registry records the
issuance of the Shares and fractions thereof and credit the Unissued Certificate
Account and the respective Shareholders' accounts with the Shares. Whenever
Shares, and fractions thereof, owned by Shareholders are surrendered for
redemption, FFC may process the transactions by making appropriate entries in
the stock transfer records, and debiting the Unissued Certificate Account (if
appropriate) and the record of issued Shares outstanding; it shall be
unnecessary for FFC to reissue Share Certificates in the name of the Fund.
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SECTION 11. FFC shall also perform the usual duties and functions
required of a stock transfer agent for a corporation, including but not limited
to (i) issuing Share Certificates as treasury shares, as directed by Written
Instructions, and (ii) transferring Share Certificates from one Shareholder to
another in the usual manner. FFC may rely conclusively and act without further
investigation upon any list, instruction, certification, authorization, Share
Certificate or other instrument or paper reasonably believed by it in good faith
to be genuine and unaltered, and to have been signed, countersigned or executed
or authorized by a duly authorized person or persons, or by the Fund, or upon
the advice of counsel for the Fund or for FFC. FFC may record any transfer of
Share Certificates which it reasonably believes in good faith to have been duly
authorized, or may refuse to record any transfer of Share Certificates if, in
good faith, it deems such refusal necessary in order to avoid any liability on
the part of either the Fund or FFC. The Fund agrees to indemnify and hold
harmless FFC from and against any and all losses, costs, claims, and liability
that it may suffer or incur by reason of such good faith reliance, action or
failure to act.
SECTION 12. FFC shall notify the Fund of any request or demand for the
inspection of the Fund's share records. FFC shall abide by the Fund's
instructions for granting or denying the inspection; provided, however, FFC may
grant the inspection without such instructions if it is advised by its counsel
that failure to do so will result in liability to FFC.
SECTION 13. As soon as possible after 4:00 p.m., Eastern Time or such
other time as the Fund may specify (the "Valuation Time") on each business day,
FFC shall obtain from the Fund's Administrator a quotation (on which it may
conclusively rely) of the net asset value, determined as of the Valuation time
on that day. On each business day, FFC shall use the net asset value determined
by the Fund's Administrator to compute the number of Shares and fractional
Shares to be purchased and the aggregate purchase proceeds to be deposited with
the Custodian. Having made these calculations, FFC shall upon receipt of
Federal funds pay the Custodian the aggregate net asset value of Shares
purchased. The aggregate number of Shares and fractional Shares purchased shall
be issued on the day net asset value is determined and credited by FFC to the
Unissued Certificate Account (if appropriate) and the individual account of the
Shareholder. FFC shall also credit each Shareholder's separate account with the
number of Shares purchased by such Shareholder. FFC shall promptly thereafter
mail written confirmation of the purchase to each Shareholder and to the Fund if
requested. Each confirmation shall indicate the prior Share balance, the new
Share balance, the Shares for which Stock Certificates are outstanding (if any),
the amount invested and the price paid for the newly-purchased Shares.
SECTION 14. Prior to the Valuation Time on each business day, as
specified in accordance with Section 13 above, FFC shall process all requests to
redeem Shares in accordance with Section 10, and shall advise the Custodian of
(i) the total number of Shares available for redemption and (ii) the number of
Shares and fractional Shares requested to be redeemed. Upon confirmation of the
net asset value by the Fund's Administrator, FFC shall notify the Fund and the
Custodian of the redemption, apply the redemption proceeds in accordance with
Section 15 and the Fund's Prospectus, record the redemption in the stock
registry books, and debit the
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redeemed Shares from the Unissued Certificate Account (if appropriate) and the
individual account of the Shareholder.
In lieu of carrying out the redemption procedures described in the
preceding paragraph, FFC may, at the request of the Fund, sell Shares to the
Fund as repurchases from Shareholders, provided that the sale price is not less
than the applicable redemption price. The redemption procedures shall then be
appropriately modified.
SECTION 15. The proceeds of redemption shall be remitted by FFC in
accordance with the Prospectus as follows:
(a) By check mailed to the Shareholder at his address of record.
Unless a Shareholder shall have authorized telephone redemptions or other forms
of redemption permitted by the Prospectus, the redemption request and Share
Certificates, if any, for Shares being redeemed must reflect a guarantee of the
owner's signature by a domestic commercial bank or trust company or a member
firm of a national securities exchange. Any officer of the Fund may authorize
FFC in writing to waive the signature guarantee for any specific transaction or
classes of transactions; or
(b) By other procedures commonly followed by mutual funds, as set
forth in the Prospectus and in a Written Instruction from the Fund and mutually
agreed upon by the Fund and FFC.
For purposes of redemption of Shares that have been purchased by check
within fifteen (15) days prior to receipt of the redemption request, the Fund
shall provide FFC with Written Instructions concerning the time within which
such requests may be honored.
The authority of FFC to perform its responsibilities under Sections 14
and 15 shall be suspended if FFC receives notice of the suspension of the
determination of the Fund's net asset value.
SECTION 16. Upon the declaration of each dividend and each capital
gains distribution by the Fund's Board of Directors, the Fund shall notify FFC
of the date of such declaration, the amount payable per Share, the record date
for determining the Shareholders entitled to payment and the payment date.
SECTION 17. On or before each payment date, the Fund will transfer, or
cause the Custodian to transfer, to FFC the total amount of the dividend or
distribution currently payable subject to such netting arrangements as may be
agreed to between the Fund and the Custodian. FFC will, on the designated
payment date, reinvest all dividends in additional Shares and, to the extent
provided by the Prospectus covering the Shares, mail to each Shareholder at his
address of record a statement showing the number of full and fractional Shares
(rounded to three decimal places) then owned by the Shareholder and the net
asset value of such Shares; provided, however, that if a Shareholder elects to
receive dividends in cash, FFC shall prepare a check in
4
<PAGE>
the appropriate amount and mail it to him at his address of record within five
(5) business days after the designated payment date.
SECTION 18. FFC shall maintain records regarding the issuance and
redemption of Shares and dividend reinvestments. Such records will list the
transactions effected for each Shareholder and the number of Shares and
fractional Shares owned by each for which no Share Certificates are outstanding.
FFC agrees to make available upon request, and to preserve for the periods
prescribed in Rule 31a-2 adopted pursuant to the Investment Company Act of 1940,
any records related to services provided under this Agreement and required to be
maintained by Rule 31a-1 of such Act.
SECTION 19. FFC shall maintain those records necessary to enable the
Fund to file, in a timely manner, Form N-SAR (Semi-Annual Report) or any
successor monthly, quarterly or annual report required by the Investment Company
Act of 1940, or rules and regulations thereunder.
SECTION 20. FFC shall cooperate with the Fund's independent public
accountants and shall take reasonable action to make all necessary information
available to such accountants for the performance of their duties.
SECTION 21. In addition to the services described above, FFC will
perform other services for the Fund as mutually agreed upon in writing from time
to time, including but not limited to preparing and filing Federal tax forms
with the Internal Revenue Service, and, subject to supervisory oversight by the
Fund's Administrator, mailing Federal tax information to Shareholders, mailing
semi-annual Shareholder reports, preparing the annual list of Shareholders,
mailing notices of Shareholders' meetings, proxies and proxy statements and
tabulating proxies. FFC shall answer Shareholder inquiries related to their
share accounts and other correspondence requiring an answer from the Fund. FFC
shall maintain dated copies of written communications from Shareholders, and
replies thereto.
SECTION 22. Nothing contained in this Agreement is intended to or shall
require FFC, in any capacity hereunder, to perform any functions or duties on
any day other than a business day (as disclosed in the Fund's prospectus).
Functions or duties normally scheduled to be performed on any day which is not a
business day shall be performed on, and as of, the next business day, unless
otherwise required by law.
SECTION 23. The Fund agrees to pay to FFC as compensation for its
services the fees set forth in Schedule A to this Agreement, or as shall be set
forth in written amendments to Schedule A approved by the parties from time to
time. Such fees shall be accrued by the Fund daily and shall be payable monthly
in arrears on the first day of each calendar month for services performed under
this Agreement during the prior calendar month. Fees will begin to accrue on
the effective date of this Agreement. FFC shall also be reimbursed for its out-
of-pocket costs incurred in providing any services hereunder, including but not
limited to the cost of any and all forms and stationery used, or specially
prepared for use, in connection with its services
5
<PAGE>
hereunder, as well as the cost of postage, telephone, bank fees and electronic
or facsimile transmission.
SECTION 24. FFC shall not be liable for any taxes, assessments or
governmental charges that may be levied or assessed on any basis whatsoever in
connection with the Fund or any Shareholder, excluding taxes assessed against
FFC for compensation received by it hereunder.
SECTION 25. FFC shall not be liable for any non-negligent action taken
in good faith and reasonably believed by FFC to be within the powers conferred
upon it by this Agreement. The Fund shall indemnify FFC and hold it harmless
from and against any and all losses, claims, damages, liabilities or expenses
(including reasonable expenses for legal counsel) arising directly or indirectly
out of or in connection with this Agreement; provided such loss, claim, damage,
liability or expense is not the result of FFC's gross negligence or willful
misconduct, and provided further that FFC shall give the Fund notice and
reasonable opportunity to defend any such loss, claim, etc. in the name of the
Fund or FFC, or both. Without limiting the foregoing:
(a) FFC may rely upon the advice of the Fund or counsel to the Fund
or FFC, and upon statements of accountants, brokers and other persons believed
by FFC in good faith to be expert in the matters upon which they are consulted.
FFC shall not be liable for any action taken in good faith reliance upon such
advice or statements;
(b) FFC shall not be liable for any action reasonably taken in good
faith reliance upon any Written Instructions or certified copy of any resolution
of the Fund's Board of Directors; provided, however, that upon receipt of a
Written Instruction countermanding a prior Instruction that has not been fully
executed by FFC, FFC shall verify the content of the second Instruction and
honor it, to the extent possible. FFC may rely upon the genuineness of any such
document, or copy thereof, reasonably believed by FFC in good faith to have been
validly executed;
(c) FFC may rely, and shall be protected by the Fund in acting, upon
any signature, instruction, request, letter of transmittal, certificate, opinion
of counsel, statement, instrument, report, notice, consent, order, or other
paper or document reasonably believed by it in good faith to be genuine and to
have been signed or presented by the purchaser, Corporation or other proper
party or parties; and
(d) FFC may, with the consent of the Fund, subcontract the
performance of all, or any portion of, the services to be provided hereunder
with respect to any Shareholder or group of shareholders to any agent of FFC and
may reimburse any such agent for the services it performs; provided that no such
reimbursement will increase the amount payable by the Fund pursuant to this
Agreement.
SECTION 26. Upon receipt of Written Instructions, FFC is authorized to
make payment upon redemption of Shares without a signature guarantee, and the
Fund hereby agrees to indemnify and hold FFC harmless from any and all expenses,
damages, claim, suits liabilities, actions, demands or losses whatsoever arising
out of or in connection with such payment if made
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in accordance with such Written Instructions. Upon the request of FFC, the Fund
shall assume the entire defense of any such action, suit or claim. FFC shall
notify the Fund in a timely manner of any such action, suit or claim.
SECTION 27. The Fund shall deliver, or cause to be delivered, over to
FFC (i) an accurate list of Shareholders of the Fund, showing each Shareholder's
address of record, number of Shares owned and whether such Shares are
represented by outstanding Share Certificates or by non-certificate Share
accounts and (ii) all Shareholder records, files, and other materials necessary
or appropriate for proper performance of the functions assumed by FFC under this
Agreement (collectively referred to as the "Materials"). The Fund shall
indemnify and hold FFC harmless from any and all expenses, damages, claims,
suits, liabilities, actions, demands and losses arising out of or in connection
with any error, omission, inaccuracy or other deficiency of such Materials, or
out of the failure of the Fund to provide any portion of the Materials or to
provide any information in the Fund's possession needed by FFC to knowledgeably
perform its functions.
SECTION 28. FFC shall, at all times, act in good faith and shall use
whatever methods it deems appropriate to ensure the accuracy of all services
performed under this Agreement. FFC shall be liable only for loss or damage due
to errors caused by FFC's negligence, bad faith or willful misconduct, or that
of its employees.
SECTION 29. This Agreement may be amended from time to time by a
written supplemental agreement executed by the Fund and FFC and without notice
to or approval of the Shareholders; provided this Agreement may not be amended
in any manner which would substantially increase the Fund's obligations
hereunder unless the amendment is first approved by the Fund's Board of
Directors. The parties hereto may adopt procedures as may be appropriate or
practical under the circumstances, and FFC may conclusively rely on the
determination of the Fund that any procedure that has been approved by the Fund
does not conflict with or violate any requirement of its Articles of
Incorporation, By-Laws or Prospectus, or any rule, regulation or requirement of
any regulatory body.
SECTION 30. The Fund shall file with FFC a certified copy of the
operative resolution of its Board of Directors authorizing the execution of
Written Instructions or the transmittal of Oral Instructions.
SECTION 31. The terms, as defined in this Section, whenever used in
this Agreement or in any amendment or supplement hereto, shall have the meanings
specified below, insofar as the context will allow.
(a) The Fund: The term Fund shall mean Sound Shore Fund, Inc. as
defined in the preamble of this Agreement.
(b) Custodian; Custodian Agreement: The term Custodian shall mean
The First National Bank of Boston or any successor or other custodian acting as
such for the Fund. The
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term Custodian Agreement shall mean the agreement or agreements between the Fund
and the Custodian or Custodians providing for custodial services to the Fund.
(c) Securities: The term Securities shall mean bonds, debentures,
notes, stocks, shares, evidences of indebtedness, and other securities and
investments from time to time owned by the Fund.
(d) Share Certificates: The term Share Certificates shall mean the
stock certificates for the Shares of the Fund.
(e) Shareholders: The term Shareholders shall mean the registered
owners from time to time of the Shares of the Fund, as reflected on the stock
registry records of the Fund.
(f) Shares: The term Shares shall mean the issued and outstanding
shares of common stock of the Fund.
(g) Oral Instructions: The term Oral Instructions shall mean an
authorization, instruction, approval, item or set of data, or information of any
kind transmitted to FFC in person or by telephone, vocal telegram or other
electronic means, by a person or persons reasonably believed in good faith by
FFC to be a person or persons authorized by a resolution of the Board of
Directors of the Fund to give Oral Instructions on behalf of the Fund.
(h) Written Instructions: The term Written Instructions shall mean
an authorization, instruction, approval, item or set of data, or information of
any kind transmitted to FFC in original writing containing original signatures,
or a copy of such document transmitted by telecopy, including transmission of
such signature, or other mechanical or documentary means, at the request of a
person or persons reasonably believed in good faith by FFC to be a person or
persons authorized by a resolution of the Board of Directors of the Fund to give
Written Instructions on behalf of the Fund.
(i) Corporation's Administrator: The term Corporation's
Administrator shall mean Forum Financial Services, Inc., or any successor
thereto who acts as the administrator of the Fund.
SECTION 32. In the event that any check or other order for the payment
of money is returned unpaid for any reason, FFC shall promptly notify the Fund
of the non-payment.
SECTION 33. Either party may give sixty (60) days written notice to the
other of the termination of this Agreement, such termination to take effect at
the time specified in the notice. Upon notice of termination, the Fund shall
use its best efforts to obtain a successor transfer agent. If a successor
transfer agent is not appointed within ninety (90) days after the date of the
notice of termination, the Board of Directors of the Fund shall, by resolution,
designate the Fund as its own transfer agent. Upon receipt of written notice
from the Fund of the appointment of the successor transfer agent and upon
receipt of Oral or Written Instructions, FFC shall, upon request of the Fund and
the successor transfer agent and upon payment of FFC's reasonable charges and
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disbursements, promptly transfer to the successor transfer agent the original or
copies of all books and records maintained by FFC hereunder and cooperate with,
and provide reasonable assistance to, the successor transfer agent in the
establishment of the books and records necessary to carry out its
responsibilities hereunder.
SECTION 34. Any notice or other communication required by or permitted
to be given in connection with this Agreement shall be in writing, and shall be
delivered in person or sent by first-class mail, postage prepaid, to the
respective parties.
Notice to the Fund shall be given as follows until further notice:
Sound Shore Fund, Inc.
Two Portland Square
Portland, Maine 04101
Notice to FFC shall be given as follows until further notice:
Forum Financial Corp.
Two Portland Square
Portland, Maine 04101
Attn.: John Y. Keffer
Copies of any notice delivered under this section shall be sent to:
Sound Shore Management, Inc.
8 Sound Shore Drive
Greenwich, Connecticut 06836
Attn.: T. Gibbs Kane, Jr.
SECTION 35. The Fund represents and warrants to FFC that the execution
and delivery of this Agreement by the undersigned officer of the Fund has been
duly and validly authorized by resolution of the Fund's Board of Directors. FFC
represents and warrants to the Fund that the execution and delivery of this
Agreement by the undersigned officer of FFC has also been duly and validly
authorized.
SECTION 36. This Agreement may be executed in more than one
counterpart, each of which shall be deemed to be an original, and shall become
effective on the date first written above unless otherwise agreed by the
parties. Unless sooner terminated pursuant to Section 33, this Agreement will
continue for a period of two years from the date hereof and will continue in
effect thereafter only if such continuance is specifically approved at least
annually by the Board of Directors or by a vote of the Shareholders of the Fund.
SECTION 37. This Agreement shall extend to and shall bind the parties
hereto and their respective successors and assigns; provided, however, that this
Agreement shall not be assignable by the Fund without the written consent of FFC
or by FFC without the written consent of the
9
<PAGE>
Fund, authorized or approved by a resolution of the Fund's Board of Directors.
Notwithstanding the foregoing, either party may assign this Agreement without
the consent of the other party so long as the assignee is an affiliate, parent
or subsidiary of the assigning party and is qualified to act under the
Investment company Act of 1940, as amended from time to time.
SECTION 38. This Agreement shall be governed by the laws of the State
of New York.
WITNESS the following signatures:
SOUND SHORE FUND, INC.
/s/ T. Gibbs Kane, Jr.
------------------------
T. Gibbs Kane, Jr.
President
FORUM FINANCIAL CORP.
/s/ John Y. Keffer
------------------------
John Y. Keffer
President
10
<PAGE>
SOUND SHORE FUND, INC.
TRANSFER AGENCY AGREEMENT
SCHEDULE A
FEES
For its services hereunder, FFC will receive fees equal to 0.075 % of
the annual average daily net assets of the Fund plus $12,000 per year. Such fees
shall be payable monthly in arrears on the first day of each calendar month for
services performed during the prior calendar month.
<PAGE>
EXHIBIT 9(a)
<PAGE>
SOUND SHORE FUND, INC.
ADMINISTRATION AGREEMENT
AGREEMENT made the 1st day of January, 1996, between Sound Shore Fund, Inc.
(the "Fund"), a corporation operating as an open-end investment company under
the Investment Company Act of 1940, duly organized and existing under the laws
of the State of Maryland, with its principal place of business at Two Portland
Square, Portland, Maine 04101, and Forum Financial Services, Inc. ("Forum"), a
corporation organized under the laws of the State of Delaware with its principal
place of business at Two Portland Square, Portland, Maine 04101.
WHEREAS, the Fund is registered under the Investment Company Act of 1940,
as amended (the "Act"), as an open-end management investment company and may
issue its shares of beneficial interest, no par value (the "Shares"), in
separate series and classes; and
WHEREAS, the Fund desires that Forum perform administrative services for
the Fund and Forum is willing to provide those services on the terms and
conditions set forth in this Agreement;
NOW THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, the Fund and Forum do hereby agree as follows:
SECTION 1. APPOINTMENT. The Fund hereby appoints Forum, and Forum hereby
agrees, to act as administrator of the Fund for the period and on the terms set
forth in this Agreement. In connection therewith, the Fund has delivered to
Forum copies of its Articles of Incorporation and By-Laws, Registration
Statement and all amendments thereto filed pursuant to the Securities Act of
1933, as amended (the "Securities Act"), or the Act (the "Registration
Statement") and current Prospectus and Statement of Additional Information (as
currently in effect and as amended or supplemented, the "Prospectus") and shall
promptly furnish Forum with all amendments of or supplements to the foregoing.
SECTION 2. ADMINISTRATIVE DUTIES.
(a) Subject to the direction and control of the board of directors of the
Fund (the "Board"), Forum shall manage all aspects of the Fund's operations
except those which are the responsibility of Sound Shore Management, Inc. (the
"Adviser"), all in such manner and to such extent as may be authorized by the
Board.
(b) Forum shall:
(i) oversee (A) the preparation and maintenance by the Adviser and the
Fund's custodian, transfer agent, dividend disbursing agent and fund
accountant (or if appropriate, prepare and maintain) in such form, for
such periods and in such locations as may be required by applicable
law, of all documents and records
- 1 -
<PAGE>
relating to the operation of the Fund required to be prepared or
maintained by the Fund or its agents pursuant to applicable law; (B)
the reconciliation of account information and balances among the
Adviser and the Fund's custodian, transfer agent, dividend disbursing
agent and fund accountant; (C) the transmission of purchase and
redemption orders for Shares; (D) the notification to the Adviser of
available funds for investment; and (E) the performance of fund
accounting, including the calculation of the net asset value of the
Shares;
(ii) oversee the performance of administrative and professional services
rendered to the Fund by others, including its custodian, transfer
agent and dividend disbursing agent as well as legal, auditing,
shareholder servicing and other services performed for the Fund;
(iii) be responsible for the preparation and the printing of the periodic
updating of the Registration Statement and Prospectus, tax returns,
and reports to shareholders, the Securities and Exchange Commission
and state securities commissions;
(iv) be responsible for the preparation of proxy and information statements
and any other communications to shareholders;
(v) at the request of the Board, provide the Fund with adequate general
office space and facilities and provide persons suitable to the Board
to serve as officers of the Fund;
(vi) with the approval of the Fund's counsel, prepare, file and maintain
the Fund's governing documents, including the Articles of
Incorporation, the Bylaws and minutes of meetings of directors and
shareholders;
(vii) with the approval of the Fund's counsel and cooperation from the
Adviser and other relevant parties, prepare and disseminate materials
for meetings of the Board;
(viii) monitor sales of Shares and ensure that such Shares are properly and
duly registered with the Securities and Exchange Commission and
applicable state securities commissions;
(ix) oversee the calculation of performance data for dissemination to
information services covering the investment company industry, for
sales literature of the Fund and other appropriate purposes;
(x) oversee the determination of the amount of and supervise the
declaration of dividends and other distributions to shareholders as
necessary to, among other things, maintain the qualification of the
Fund as a regulated investment company under the Internal Revenue Code
of 1986, as amended, and prepare and distribute
- 2 -
<PAGE>
to appropriate parties notices announcing the declaration of dividends
and other distributions to shareholders; and
(xi) advise the Fund and the Board on matters concerning the Fund and its
affairs.
(c) The books and records pertaining to the Fund which are in possession
of Forum shall be the property of the Fund. The Fund, or the Fund's authorized
representatives, shall have access to such books and records at all times during
Forum's normal business hours. Upon the reasonable request of the Fund, copies
of any such books and records shall be provided promptly by Forum to the Fund or
the Fund's authorized representatives. In the event the Fund designates a
successor to any of Forum's obligations hereunder, Forum shall, at the expense
and direction of the Fund, transfer to such successor all relevant books,
records and other data established or maintained by Forum under this Agreement.
SECTION 3. STANDARD OF CARE; LIMITATION OF LIABILITY.
(a) Forum shall use its best judgment and efforts in rendering the
services described in this Agreement. Forum shall not be liable to the Fund for
any action or inaction of Forum in the absence of bad faith, willful misconduct
or gross negligence or based upon information, instructions or requests made to
Forum by an officer of the Fund duly authorized. Forum shall not be responsible
or liable for any failure or delay in performance of its obligations under this
Agreement caused by circumstances beyond its reasonable control.
(b) The Fund agrees to indemnify and hold harmless Forum, its employees,
agents, officers and directors against and from any and all claims, judgments,
losses, charges (including attorneys' fees) and other reasonable expenses
arising out of Forum's actions or omissions that are consistent with the
standard of care set forth in paragraph (a) of this section.
(c) Forum agrees to indemnify and hold harmless the Fund, its employees,
agents, officers and directors against and from any and all claims, judgments,
losses, charges (including attorneys' fees) and other reasonable expenses
arising out of Forum's actions or omissions that are not consistent with the
standard of care set forth in paragraph (a) of this section.
(d) Neither party shall be required to indemnify the other if, prior to
confessing any claim against it which may be subject to indemnification, the
indemnified party does not give the indemnifying party written notice of, and
reasonable opportunity to defend against, the claim.
SECTION 4. EXPENSES. Subject to any agreement by the Adviser or other
person to reimburse any expenses of the Fund, the Fund shall be responsible for
and assumes the obligation for payment of all of its reasonable expenses,
including: (a) the fee payable under Section 5 hereof; (b) the fees payable to
the Adviser under an agreement between the Adviser and the Fund; (c) expenses of
issue, repurchase and redemption of Shares; (d) interest charges, taxes and
brokerage fees and commissions, including the fees and commissions of
introducing brokers; (e) premiums of insurance for the Fund, its directors and
officers and fidelity bond premiums; (f) fees, interest charges and expenses of
third parties, including the Fund's custodian,
- 3 -
<PAGE>
transfer agent, dividend disbursing agent and fund accountant; (g) fees of
pricing, interest, dividend, credit and other reporting services; (h) costs of
membership in trade associations; (i) telecommunications expenses; (j) funds
transmission expenses; (k) auditing, legal and compliance expenses; (l) costs of
forming the Fund and maintaining its existence; (m) costs of preparing and
printing Corporation's Prospectuses, subscription application forms and
shareholder reports and delivering them to existing shareholders; (n) expenses
of meetings of shareholders and proxy solicitations therefor; (o) costs of
maintaining books of original entry for portfolio and fund accounting and other
required books and accounts, of calculating the net asset value of Shares of the
Fund and of preparing tax returns; (p) costs of reproduction, stationery and
supplies; (q) fees and expenses of the Fund's directors; (r) compensation of the
Fund's officers and employees who are not employees of the Adviser or
Administrator or their respective affiliated persons and costs of other
personnel (who may be employees of the Adviser, Forum or their respective
affiliated persons) performing services for the Fund; (s) costs of director
meetings; (t) Securities and Exchange Commission registration fees and related
expenses; (u) state or foreign securities laws registration fees and related
expenses; and (v) all fees and expenses paid by the Fund in accordance with any
distribution plan adopted pursuant to Rule 12b-1 under the Act or under any
shareholder service plan or agreement.
SECTION 5. COMPENSATION.
(a) For the administrative services provided by Forum pursuant to this
Agreement, the Fund shall pay Forum a fee at an annual rate equal to the amount
set forth in Schedule A hereto. Such fees shall be accrued by the Fund daily
and shall be payable monthly in arrears on the first day of each calendar month
for services performed under this Agreement during the prior calendar month.
Upon the termination of this Agreement, the Fund shall pay to Forum such
compensation as shall be payable prior to the effective date of such
termination.
(b) Notwithstanding anything in this Agreement to the contrary, Forum and
its affiliated persons may receive compensation or reimbursement from the Fund
with respect to (i) the provision of services in accordance with any
distribution plan adopted by the Fund pursuant to Rule 12b-1 under the Act, (ii)
the provision of shareholder support or other services or (iii) service as a
director or officer of the Fund.
SECTION 6. EFFECTIVENESS, DURATION AND TERMINATION.
(a) This Agreement shall become effective as of the date first above
written.
(b) This Agreement shall continue in effect for twelve months and,
thereafter, shall be automatically renewed each year for an additional term of
one year.
(c) This Agreement may be terminated at any time, without the payment of
any penalty (i) by the Board on 60 days' written notice to Forum or (ii) by
Forum on 60 days' written notice to the Fund.
- 4 -
<PAGE>
SECTION 7. ACTIVITIES OF ADMINISTRATOR. Except to the extent necessary to
perform its obligations under this Agreement, nothing herein shall be deemed to
limit or restrict Forum's right, or the right of any of its officers, directors
or employees (whether or not they are a director, officer, employee or other
affiliated person of the Fund) to engage in any other business or to devote time
and attention to the administration or other aspects of any other business,
whether of a similar or dissimilar nature, or to render services of any kind to
any other corporation, trust, firm, individual or association.
SECTION 8. LIMITATION OF SHAREHOLDER AND DIRECTOR LIABILITY. Neither the
directors of the Fund nor its shareholders shall be liable for any obligations
of the Fund under this Agreement, and Forum agrees that, in asserting any rights
or claims under this Agreement, it shall look only to the assets and property of
the Fund to which Forum's rights or claims relate in settlement of such rights
or claims, and not to the directors or the shareholders of the Fund.
SECTION 9. NOTICE. Any notice or other communication required by or
permitted to be given in connection with this Agreement shall be in writing, and
shall be delivered in person or sent by first-class mail, postage prepaid, to
the respective parties.
Notice to the Fund shall be given as follows until further notice:
Sound Shore Fund, Inc.
Two Portland Square
Portland, Maine 04101
Notice to Forum shall be given as follows until further notice:
Forum Financial Services, Inc.
Two Portland Square
Portland, Maine 04101
Attn.: John Y. Keffer
Copies of any notice delivered under this section shall be sent to:
Sound Shore Management, Inc.
8 Sound Shore Drive
Greenwich, Connecticut 06836
Attn.: T. Gibbs Kane, Jr.
SECTION 10. CONFIDENTIALITY. Forum agrees to treat all records and other
information related to the Fund as proprietary information of the Fund and, on
behalf of itself and its employees, to keep confidential all such information,
except that Forum may
(a) prepare or assist in the preparation of periodic reports to
shareholders and regulatory bodies such as the Securities and Exchange
Commission;
- 5 -
<PAGE>
(b) provide information typically supplied in the investment company
industry to companies that track or report price, performance or other
information regarding investment companies; and
(c) release such other information as approved in writing by the Fund,
which approval shall not be unreasonably withheld and may not be withheld where
Forum may be exposed to civil or criminal contempt proceedings for failure to
comply, when requested to divulge such information by duly constituted
authorities or when so requested by the Fund.
SECTION 11. MISCELLANEOUS.
(a) No provisions of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by both
parties hereto and, if required by the Act, by a vote of a majority of the
outstanding voting securities of the Fund.
(b) If any part, term or provision of this Agreement is held to be
illegal, in conflict with any law or otherwise invalid, the remaining portion or
portions shall be considered severable and not be affected, and the rights and
obligations of the parties shall be construed and enforced as if the Agreement
did not contain the particular part, term or provision held to be illegal or
invalid.
(c) Section headings in this Agreement are included for convenience only
and are not to be used to construe or interpret this Agreement.
(d) Notices, requests, instructions and communications received by the
parties at their respective principal places of business, or at such other
address as a party may have designated in writing, shall be deemed to have been
properly given.
(e) This Agreement shall be governed by and shall be construed in
accordance with the laws of the State of New York.
- 6 -
<PAGE>
(f) The terms "vote of a majority of the outstanding voting securities,"
"interested person," and "affiliated person" shall have the meanings ascribed
thereto in the Act.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
SOUND SHORE FUND, INC.
/s/ T. Gibbs Kane, Jr.
------------------------
T. Gibbs Kane, Jr.
President
FORUM FINANCIAL SERVICES, INC.
/s/ John Y. Keffer
------------------------
John Y. Keffer
President
- 7 -
<PAGE>
SOUND SHORE FUND, INC.
ADMINISTRATION AGREEMENT
SCHEDULE A
ADMINISTRATION FEES
FOR ITS SERVICES HEREUNDER, FORUM WILL RECEIVE FEES EQUAL TO 0.10% OF THE
ANNUAL AVERAGE DAILY NET ASSETS OF THE FUND. SUCH FEES SHALL BE PAYABLE MONTHLY
IN ARREARS ON THE FIRST DAY OF EACH CALENDAR MONTH FOR SERVICES PERFORMED DURING
THE PRIOR CALENDAR MONTH.
<PAGE>
EXHIBIT 9(b)
<PAGE>
SOUND SHORE FUND, INC.
FUND ACCOUNTING AGREEMENT
AGREEMENT made the 1st day of January, 1996, between Sound Shore Fund, Inc.
(the "Fund"), a corporation operating as an open-end investment company under
the Investment Company Act of 1940, duly organized and existing under the laws
of the State of Maryland, with its principal place of business at Two Portland
Square, Portland, Maine 04101, and Forum Accounting Services LLC ("FAS"), a
corporation organized under the laws of the State of Delaware with its principal
place of business at Two Portland Square, Portland, Maine 04101.
WHEREAS, the Fund is registered under the Investment Company Act of 1940,
as amended (the "Act"), as an open-end management investment company and may
issue its shares of beneficial interest, no par value (the "Shares"), in
separate series and classes; and
WHEREAS, the Fund desires that FAS perform certain fund accounting services
for the Fund, and FAS is willing to provide those services on the terms and
conditions set forth in this Agreement;
NOW THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, the Fund and FAS do hereby agree as follows:
SECTION 1. SERVICES TO BE PERFORMED. FAS shall perform the services
listed in this Section. FAS and the Fund's administrator, Forum Financial
Services, Inc. ("Forum"), may from time to time adopt such procedures as they
agree upon to implement the terms of this Section.
(a) BOOKS AND RECORDS. FAS shall prepare and maintain on behalf of the
Fund the following books and records pursuant to Rule 31a-1 under the Act (the
"Rule"):
(i) Journals containing an itemized daily record in detail of all
purchases and sales of securities, all receipts and disbursements of
cash and all other debits and credits, as required by subsection
(b)(1) of the Rule;
(ii) Journals and auxiliary ledgers reflecting all asset, liability,
reserve, capital, income and expense accounts, as required by
subsection (b)(2) of the Rule (but not including the ledgers required
by subsection (b)(2)(iv);
(iii) A record of each brokerage order given by or on behalf of
the Fund for, or in connection with, the purchase or sale of
securities, and all other portfolio purchases or sales, as required by
subsections (b)(5) and (b)(6) of the Rule;
(iv) A record of all options, if any, in which the Fund has any direct
or indirect interest or which the Fund has granted or guaranteed and a
record of any
1
<PAGE>
contractual commitments to purchase, sell, receive or
deliver any property as required by subsection (b)(7) of the Rule;
(v) A monthly trial balance of all ledger accounts (except
shareholder accounts) as required by subsection (b)(8) of the Rule;
and
(vi) Other records required by the Rule or any successor rule or
pursuant to interpretations thereof to be kept by open-end management
investment companies, but limited to these provisions of the Rule
applicable to portfolio transactions and as agreed upon between the
parties hereto.
The forgoing books and records shall be prepared and maintained in such
form, for such periods and in such locations as may be required by applicable
regulation and shall be the property of the Fund. FAS agrees to make such books
and records available for inspection by the Fund or by the Securities and
Exchange Commission at reasonable times and as otherwise directed by Forum.
(b) ACCOUNTING SERVICES. FAS shall:
(i) Calculate the net asset value per share with the frequency
prescribed in the Fund's then-current Prospectus;
(ii) Calculate dividends and capital gain distributions, if any, as
required by the Fund;
(iii) Calculate the yield, effective yield, tax equivalent yield
and total return for the Fund, and each class thereof, as applicable,
and such other measure of performance as may be agreed upon between
the parties hereto;
(iv) Provide the Fund and such other persons as Forum may direct with
the following reports:
(A) a current securities position report,
(B) a summary report of transactions and pending maturities
(including the principal, cost, and accrued interest on each
portfolio security in maturity date order), and
(C) a current cash position and projection report;
(v) Prepare and record, as of each time when the net asset value of
the Fund is calculated or as otherwise directed by Forum, either
(A) a valuation of the assets in the Fund (based upon the use of
outside services normally used and contracted for this purpose by
FAS in the case
2
<PAGE>
of securities for which information and market
price or yield quotations are readily available and based upon
evaluations conducted in accordance with Forum's instructions in
the case of all other assets) or
(B) a calculation confirming that the market value of the Fund's
assets does not deviate from the amortized cost value of those
assets by more than a specified percentage agreed to from time to
time by FAS and Forum;
(vi) Make such adjustments over such periods as FAS deems necessary to
reflect over-accruals or under-accruals of estimated expenses or
income; and
(vii) Obtain necessary information from Forum and the Fund's
transfer agent in order to prepare, and prepare, the Fund's Form N-
SAR.
(c) OTHER SERVICES. FAS shall:
(i) Assist the Fund's independent accountants and, upon approval of
the Fund or Forum, any regulatory body in any requested review of the
Fund's books and records maintained by FAS; and
(ii) Prepare periodic reports to shareholders and the Securities and
Exchange Commission and such other reports as may be agreed to from
time to time and provide information typically supplied in the
investment company industry to companies that track or report price,
performance or other information with respect to investment companies.
SECTION 2. COMPENSATION.
(a) FEE. For the services provided by FAS pursuant to this Agreement, the
Fund shall pay to FAS a fee as calculated in accordance with Schedule A hereto.
Such fees shall be accrued by the Fund daily and shall be payable monthly in
arrears on the first day of each calendar month for services performed under
this Agreement during the prior calendar month. Fees will begin to accrue on
the effective date of this Agreement.
(b) REIMBURSEMENT OF EXPENSES. The Fund shall reimburse FAS for all of
FAS's reasonable out-of-pocket expenses incurred in the performance of its
duties hereunder. The Fund also shall reimburse FAS for all reasonable expenses
and employee time attributable to any review of the Fund's accounts and records
by the Fund's independent accountants or any regulatory body outside of routine
and normal periodic reviews and for all reasonable expenses for services in
connection with FAS's activities in effecting any termination of this Agreement
(except the termination of FAS for cause), including reasonable expenses
incurred by FAS to deliver the Fund's property in FAS's possession to the Fund
or other persons.
3
<PAGE>
SECTION 3. TERM. This Agreement shall become effective as of the date
first above written and shall remain in effect for 12 months. Thereafter, this
Agreement shall remain in effect indefinitely. This Agreement may be terminated
without the payment of any penalty, (i) by a vote of a majority of the Fund's
Board of Directors on 60 days' written notice to FAS or (ii) by FAS on 60 days'
written notice to the Fund. For so long as FAS continues to perform any of the
services contemplated by this Agreement after termination of this Agreement (as
agreed to by the Fund and FAS), the provisions of Sections 2 and 4 hereof shall
continue in full force and effect.
SECTION 4. STANDARD OF CARE; LIMITATION OF LIABILITY.
(a) FAS shall use its best judgment and efforts in rendering the services
described in this Agreement. FAS shall not be liable to the Fund for any action
or inaction of FAS in the absence of bad faith, willful misconduct or gross
negligence or based upon information, instructions or requests made to FAS by an
officer of the Fund duly authorized. FAS shall not be responsible or liable for
any failure or delay in performance of its obligations under this Agreement
caused by circumstances beyond its reasonable control.
(b) The Fund agrees to indemnify and hold harmless FAS, its employees,
agents, officers and Directors against and from any and all claims, judgments,
losses, charges (including attorneys' fees) and other reasonable expenses
arising out of FAS's actions taken or failures to act under the circumstances
described in paragraph (a) of this section.
(c) FAS agrees to indemnify and hold harmless the Fund, its employees,
agents, officers and Directors against and from any and all claims, judgments,
losses, charges (including attorneys' fees) and other reasonable expenses
arising out of FAS's actions taken or failures to act in cases of FAS's own bad
faith, willful misconduct or gross negligence.
(d) Neither party shall be required to indemnify the other if, prior to
confessing any claim against it which may be subject to indemnification, the
indemnified party does not give the indemnifying party written notice of, and
reasonable opportunity to defend against, the claim.
SECTION 5. ASSIGNMENT. This Agreement and the rights and duties hereunder
shall not be assignable by either of the parties hereto except by the specific
written consent of the other party. All terms and provisions of this Agreement
shall be binding upon, inure to the benefit of and be enforceable by the
respective successors and assigns of the parties hereto.
SECTION 6. CONFIDENTIALITY. FAS agrees to treat all records and other
information related to the Fund as proprietary information of the Fund and, on
behalf of itself and its employees, to keep confidential all such information,
except that FAS may
(a) prepare or assist in the preparation of periodic reports to
shareholders and regulatory bodies such as the Securities and Exchange
Commission;
4
<PAGE>
(b) provide information typically supplied in the investment company
industry to companies that track or report price, performance or other
information regarding investment companies; and
(c) release such other information as approved in writing by the Fund,
which approval shall not be unreasonably withheld and may not be withheld where
FAS may be exposed to civil or criminal contempt proceedings for failure to
comply, when requested to divulge such information by duly constituted
authorities or when so requested by the Fund.
SECTION 7. NOTICE. Any notice or other communication required by or
permitted to be given in connection with this Agreement shall be in writing, and
shall be delivered in person or sent by first-class mail, postage prepaid, to
the respective parties.
Notice to the Fund shall be given as follows until further notice:
Sound Shore Fund, Inc.
Two Portland Square
Portland, Maine 04101
Notice to FAS shall be given as follows until further notice:
Forum Accounting Services LLC
Two Portland Square
Portland, Maine 04101
Attn.: John Y. Keffer
Copies of any notice delivered under this section shall be sent to:
Sound Shore Management, Inc.
8 Sound Shore Drive
Greenwich, Connecticut 06836
Attn.: T. Gibbs Kane, Jr.
SECTION 8. MISCELLANEOUS.
(a) No provisions of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by both
parties hereto.
(b) If any part, term or provision of this Agreement is held to be
illegal, in conflict with any law or otherwise invalid, the remaining portion or
portions shall be considered severable and not be affected, and the rights and
obligations of the parties shall be construed and enforced as if the Agreement
did not contain the particular part, term or provision held to be illegal or
invalid.
5
<PAGE>
(c) Section and Paragraph headings in this Agreement are included for
convenience only and are not to be used to construe or interpret this Agreement.
(d) This Agreement shall be governed by and shall be construed in
accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
SOUND SHORE FUND, INC.
/s/ T. Gibbs Kane, Jr.
-----------------------
T. Gibbs Kane, Jr.
President
FORUM ACCOUNTING SERVICES LLC
/s/ John Y. Keffer
------------------------
John Y. Keffer
President
6
<PAGE>
SOUND SHORE FUND, INC.
FUND ACCOUNTING AGREEMENT
SCHEDULE A
FEES
For its services hereunder, FAS will receive fees equal to 0.075% of the
annual average daily net assets of the Fund. Such fees shall be payable monthly
in arrears on the first day of each calendar month for services performed during
the prior calendar month.
<PAGE>
EXHIBIT 9(c)
<PAGE>
SOUND SHORE FUND, INC.
ADMINISTRATIVE SERVICES AGREEMENT
AGREEMENT made this 15th day of March, 1994, between Sound Shore Fund, Inc.
("Sound Shore"), a corporation organized under the laws of the State of Maryland
with its principal place of business at 61 Broadway, New York, New York 10006,
and Forum Financial Services, Inc. ("Forum"), a corporation organized under the
laws of State of Delaware with its principal place of business at 61 Broadway,
New York, New York 10006.
WHEREAS, Sound Shore is registered under the Investment Company Act of
1940, as amended as an open-end management investment company and issues shares
of common stock, par value $0.001, (the "Shares"); and
WHEREAS, Sound Shore desires that Forum perform administrative services for
the Sound Shore Fund (the "Fund") and Forum is willing to provide those services
on the terms and conditions set forth in this Agreement;
NOW THEREFORE, Sound Shore and Forum agree as follows:
SECTION 1. SOUND SHORE; DELIVERY OF DOCUMENTS
Sound Shore is engaged in the business of investing and reinvesting its
assets in securities of the type and in accordance with the limitations
specified in its Articles of Incorporation, By-Laws and registration statement
filed with the Securities and Exchange Commission (the "SEC"), under the
Investment Company Act of 1940 ("the "Act") and the Securities Act of 1933 (the
"Securities Act"), including any representations made in a prospectus
("Prospectus") or statement of additional information ("Statement of Additional
Information") relating to the Fund contained therein and as may be supplemented
from time to time, all in such manner and to such extent as may from time to
time be authorized by Sound Shore's Board of Directors (the "Board"). Sound
Shore has delivered copies of the documents listed in this Section and will from
time to time furnish Forum with any amendments thereof.
SECTION 2. APPOINTMENT
Sound Shore hereby employs Forum, subject to the direction and control of
the Board, to administer all aspects of Sound Shore's operations with respect to
the Fund except those which are the responsibility of Sound Shore Management,
Inc. ("Adviser"), the Fund's investment adviser.
SECTION 3. ADMINISTRATIVE DUTIES
With respect to the Fund, Forum will:
1
<PAGE>
(a) provide Sound Shore with the services of persons competent to perform
such supervisory, administrative and clerical functions as are necessary to
provide effective operation of Sound Shore, including (i) the maintenance of
certain books and records, such as journals, ledger accounts and other records
described in Rule 31a-1 under the Act, (ii) the transmission of purchase and
redemption orders for shares of the Fund, (iii) the notification to the Adviser
of available funds for investment and (iv) the reconciliation of account
information and balances among the Fund's custodian, transfer agent and dividend
disbursing agent and the Adviser;
(b) oversee the performance of administrative and professional services
rendered to Sound Shore by others, including its custodian, transfer agent and
dividend disbursing agent, as well as accounting, auditing and other services
performed for Sound Shore;
(c) provide Sound Shore with adequate general office space and facilities;
(d) oversee the preparation and the printing of the periodic updating of
Sound Shore's registration statement, Prospectus and Statement of Additional
Information, Sound Shore's tax returns, and reports to its stockholders, the SEC
and state securities administrators;
(e) calculate, or have Forum Financial Corp. calculate, the net asset value
of shares of the Fund; and
(f) maintain records relating to its services as are required to be
maintained by Sound Shore under the Act.
The books and records pertaining to Sound Shore which are in possession of
Forum shall be the property of Sound Shore. Sound Shore, or Sound Shore's
authorized representatives, shall have access to such books and records at all
times during Forum's normal business hours. Upon the reasonable request of
Sound Shore, copies of any such books and records shall be provided promptly by
Forum to Sound Shore or Sound Shore's authorized representatives.
SECTION 4. STANDARD OF CARE
Sound Shore shall expect of Forum, and Forum will give Sound Shore the
benefit of, Forum's best judgment and efforts in rendering these services to
Sound Shore, and Sound Shore agrees as an inducement to Forum's undertaking
these services that Forum shall not be liable hereunder for any mistake of
judgment or in any event whatsoever, except for lack of good faith, provided
that nothing herein shall be deemed to protect, or purport to protect, Forum
against any liability to Sound Shore or to its security holders to which Forum
would otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of Forum's duties hereunder, or by reason of
Forum's reckless disregard of its obligations and duties hereunder.
SECTION 5. COMPENSATION; EXPENSES
(a) In consideration of the administrative services performed by Forum as
described herein, Sound Shore will pay Forum, with respect to the Fund a fee at
the annual rate of 0.25% of
2
<PAGE>
the average annual daily net assets of the Fund. Such fee shall be accrued by
Sound Shore daily and shall be payable monthly in arrears on the first day of
each calendar month for services performed hereunder during the prior
calendar month.
(b) Subject to the investment management agreement between Sound Shore and
the Adviser, Sound Shore shall be responsible and hereby assume the obligation
for payment of all Sound Shore's expenses, including payment of (i) the fee
payable to Forum under this Section 5 and the fee payable to the Adviser
pursuant to the investment management agreement between the Adviser and Sound
Shore; (ii) taxes, brokerage fees and commissions; (iii) liability insurance and
fidelity bond premiums; (iv) fees, interest charges and expenses of Sound
Shore's custodian, transfer agent and dividend disbursing agent and any
shareholder servicing agent fees; (v) auditing, legal and compliance expenses;
(vi) costs of forming Sound Shore and maintaining its existence; (vii) costs of
preparing and printing Sound Shore's Prospectuses, Statements of Additional
Information, subscription application forms and stockholder reports and their
delivery to existing and prospective stockholders; (viii) costs of corporate
meetings; (ix) SEC registration fees and related expenses; (x) state securities
laws registration fees and related expenses; (xi) trade association fees; and
(xii) all costs borne by Sound Shore pursuant to any distribution plan that may
adopted by Sound Shore pursuant to Rule 12b-1 under the Act.
(c) Forum shall be responsible for the portion of the net expenses of the
Fund (except interest, taxes, brokerage fees, extraordinary expenses and
distribution expenses, all to the extent such exclusions are permitted by
applicable state law and regulation) incurred by the Fund during each fiscal
year or portion thereof that this agreement is in effect which in any year
exceeds the limits applicable to the Fund under the laws or regulations of any
state in which the Shares are qualified for sale (reduced pro rata for any
portion of less than a year).
SECTION 6. EFFECTIVENESS, DURATION AND TERMINATION
(a) This Agreement shall become effective on the date hereof. Upon
effectiveness of this Agreement, it shall supersede all previous agreements
between the parties hereto covering the subject matter hereof.
(b) This Agreement shall continue in effect for a period of one year from
its effectiveness and shall continue in effect for successive twelve-month
periods; provided, however, that continuance is specifically approved at least
annually (i) by the Board or by a vote of a majority of the outstanding voting
securities of the Fund and (ii) by a vote of a majority of Directors of Sound
Shore who are not parties to this agreement or interested persons of any such
party (other than as Directors of Sound Shore); provided further, however, that
if the continuation of this agreement is not approved, Forum may continue to
render the services described herein in the manner and to the extent permitted
by the Act and the rules and regulations thereunder.
(c) This Agreement may be terminated at any time, without the payment of
any penalty, (i) by the Board on 60 days' written notice to Forum or (ii) by
Forum on 60 days' written notice to Sound Shore.
3
<PAGE>
SECTION 7. ACTIVITIES OF FORUM
Except to the extent necessary to perform Forum's obligations hereunder,
nothing herein shall be deemed to limit or restrict Forum's right, or the right
of any of Forum's officers, directors or employees who may also be a director,
officer or employee of Sound Shore, or persons otherwise affiliated persons of
Sound Shore to engage in any other business or to devote time and attention to
the management or other aspects of any other business, whether of a similar or
dissimilar nature, or to render services of any kind to any other corporation,
trust, firm, individual or association.
SECTION 8. MISCELLANEOUS
(a) No provisions of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by both
parties hereto.
(b) Section headings in this Agreement are included for convenience only
and are not to be used to construe or interpret this Agreement.
(c) This Agreement shall be governed by and shall be construed in
accordance with the laws of the State of New York.
(d) The terms "vote of a majority of the outstanding voting securities",
"interested person", "affiliated person" and "assignment" shall have the
meanings ascribed thereto in the Act.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
SOUND SHORE FUND, INC.
/s/ T. Gibbs Kane
------------------------------
T. Gibbs Kane
President
FORUM FINANCIAL SERVICES, INC.
/s/ John Y. Keffer
------------------------------
John Y. Keffer
President
4
<PAGE>
EXHIBIT 11
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the use in Post-Effective Amendment No. 16 to Registration
Statement No. 2-96141 of Sound Shore Fund, Inc. of our report dated February
16, 1996, incorporated by reference in the Statement of Additional
Information, which is a part of such Registration Statement, and to the
references to us under the headings "Financial Highlights" in the
Prospectus, which is a part of such Registration Statement, and "Counsel and
Auditors" in the Statement of Additional Information.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
New York, New York
April 26, 1996
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the
Sound Shore Annual Report dated December 31, 1995 and is qualified in its
entirety by reference to such report.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 55,272,782
<INVESTMENTS-AT-VALUE> 68,840,506
<RECEIVABLES> 130,114
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 68,970,620
<PAYABLE-FOR-SECURITIES> 1,631,335
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 54,638
<TOTAL-LIABILITIES> 1,685,973
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 53,880,450
<SHARES-COMMON-STOCK> 3,722,085
<SHARES-COMMON-PRIOR> 3,880,308
<ACCUMULATED-NII-CURRENT> 908,397
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 5,894,436
<OVERDISTRIBUTION-GAINS> (5,712,224)
<ACCUM-APPREC-OR-DEPREC> 13,567,724
<NET-ASSETS> 67,601,678
<DIVIDEND-INCOME> 1,238,959
<INTEREST-INCOME> 415,829
<OTHER-INCOME> 0
<EXPENSES-NET> 746,391
<NET-INVESTMENT-INCOME> 908,397
<REALIZED-GAINS-CURRENT> 5,894,436
<APPREC-INCREASE-CURRENT> 10,117,906
<NET-CHANGE-FROM-OPS> 16,920,739
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 755,501
<DISTRIBUTIONS-OF-GAINS> 5,712,224
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 315,052
<NUMBER-OF-SHARES-REDEEMED> 802,786
<SHARES-REINVESTED> 329,511
<NET-CHANGE-IN-ASSETS> 7,608,521
<ACCUMULATED-NII-PRIOR> 796,916
<ACCUMULATED-GAINS-PRIOR> 3,007,088
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 485,139
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 746,391
<AVERAGE-NET-ASSETS> 64,685,212
<PER-SHARE-NAV-BEGIN> 15.46
<PER-SHARE-NII> 0.25
<PER-SHARE-GAIN-APPREC> 4.33
<PER-SHARE-DIVIDEND> (0.21)
<PER-SHARE-DISTRIBUTIONS> (1.67)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 18.16
<EXPENSE-RATIO> 1.15
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<PAGE>
OTHER EXHIBITS
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that Walter R. Nelson constitutes and
appoints T. Gibbs Kane, Jr., Harry Burn, III and William Goodwin and each of
them, as true and lawful attorneys-in-fact and agents with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities to sign the Registration Statement on Form N1-A and any
or all amendments thereto of Sound Shore Fund, Inc., and to file the same with
the Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or their or his substitute
or substitutes, may lawfully do or cause to be done by virtue hereof.
/s/ Walter R. Nelson
-------------------------
Walter R. Nelson
Dated: May 3, 1994
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that D. Kenneth Baker constitutes and
appoints T. Gibbs Kane, Jr., Harry Burn, III and William Goodwin and each of
them, as true and lawful attorneys-in-fact and agents with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities to sign the Registration Statement on Form N1-A and any
or all amendments thereto of Sound Shore Fund, Inc., and to file the same with
the Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or their or his substitute
or substitutes, may lawfully do or cause to be done by virtue hereof.
/s/ D. Kenneth Baker
-------------------------
D. Kenneth Baker
Dated: May 3, 1994
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that Mark P. Figgie constitutes and
appoints T. Gibbs Kane, Jr., Harry Burn, III and William Goodwin and each of
them, as true and lawful attorneys-in-fact and agents with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities to sign the Registration Statement on Form N1-A and any
or all amendments thereto of Sound Shore Fund, Inc., and to file the same with
the Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or their or his substitute
or substitutes, may lawfully do or cause to be done by virtue hereof.
/s/ Mark P. Figgie
-------------------------
Mark P. Figgie
Dated: May 3, 1994
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that Charles J. Hedlund constitutes and
appoints T. Gibbs Kane, Jr., Harry Burn, III and William Goodwin and each of
them, as true and lawful attorneys-in-fact and agents with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities to sign the Registration Statement on Form N1-A and any
or all amendments thereto of Sound Shore Fund, Inc., and to file the same with
the Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or their or his substitute
or substitutes, may lawfully do or cause to be done by virtue hereof.
/s/ Charles J. Hedlund
-------------------------
Charles J. Hedlund
Dated: May 3, 1994
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that T. Gibbs Kane, Jr. constitutes and
appoints Harry Burn, III, Shanna S. Sullivan and William Goodwin and each of
them, as true and lawful attorneys-in-fact and agents with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities to sign the Registration Statement on Form N1-A and any
or all amendments thereto of Sound Shore Fund, Inc., and to file the same with
the Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or their or his substitute
or substitutes, may lawfully do or cause to be done by virtue hereof.
/s/ T. Gibbs Kane, Jr.
-------------------------
T. Gibbs Kane, Jr.
Dated: May 3, 1994
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that John L. Lesher constitutes and
appoints T. Gibbs Kane, Jr., Harry Burn, III and William Goodwin and each of
them, as true and lawful attorneys-in-fact and agents with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities to sign the Registration Statement on Form N1-A and any
or all amendments thereto of Sound Shore Fund, Inc., and to file the same with
the Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or their or his substitute
or substitutes, may lawfully do or cause to be done by virtue hereof.
/s/ John L. Lesher
-------------------------
John L. Lesher
Dated: May 3, 1994
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that John J. McCloy, II constitutes and
appoints T. Gibbs Kane, Jr., Harry Burn, III and William Goodwin and each of
them, as true and lawful attorneys-in-fact and agents with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities to sign the Registration Statement on Form N1-A and any
or all amendments thereto of Sound Shore Fund, Inc., and to file the same with
the Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or their or his substitute
or substitutes, may lawfully do or cause to be done by virtue hereof.
/s/ John J. McCloy, II
-------------------------
John J. McCloy, II
Dated: May 3, 1994
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that Harry Burn, III constitutes and
appoints T. Gibbs Kane, Jr., Shanna S. Sullivan and William Goodwin and each of
them, as true and lawful attorneys-in-fact and agents with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities to sign the Registration Statement on Form N1-A and any
or all amendments thereto of Sound Shore Fund, Inc., and to file the same with
the Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or their or his substitute
or substitutes, may lawfully do or cause to be done by virtue hereof.
/s/ Harry Burn, III
-------------------------
Harry Burn, III
Dated: May 3, 1994
